- EUR/JPY seems to have carved out a bear flag on the 8-hour chart.
- A break below 122.65 would confirm a bear flag breakdown.
EUR/JPY is on the defensive and could soon drop to the bear flag support of 122.65, courtesy of risk aversion and increased demand for the anti-risk Japanese Yen.
Acceptance below 122.65 would confirm a bear flag breakdown - a continuation pattern which often accelerates the preceding bearish move. So, a flag breakdown, if confirmed, could yield a sell-off to levels below 112.00.
Supporting the bearish case is the below-50 print on the 14-day relative strength index (RSI).
The outlook, however, would turn bullish if the cross rises above 123.08, validating the positive crossover the 5- and 10-day moving averages (MAs) confirmed earlier this week.
Trend: Bearish below 122.65
- R3 123.93
- R2 123.73
- R1 123.39
- PP 123.18
- S1 122.84
- S2 122.64
- S3 122.3
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