EUR/JPY Mid-Day Outlook

Daily Pivots: (S1) 159.86; (P) 160.68; (R1) 161.41; More.

EUR/JPY lacked follow through selling after passing 160.19 and recovers strongly since then. An intraday low should be in place with 4 hours MACD crossed above signal line again. Outlook is turned neutral for the moment. Though, further decline is still in favor as long as 163.09 resistance holds. Below 159.93 will encourage deeper fall to key support level at 158.60 (61.8% retracement of 151.71 to 169.96 at 158.68). On the upside, break of 163.09 will indicate that EUR/JPY has finally made and short term bottom and bring stronger rebound before staging another fall.

In the bigger picture, rise from 151.71 has completed at 169.69 after failing 170 psychological resistance. Deeper decline is expected to be seen to test 158.60 cluster support. More importantly, the case for a long term top continues to build up with bearish divergence conditions in weekly MACD and RSI and with monthly MACD remains below signal line. Focus is now on long term rising channel support (now at 158.87). Sustained break of the channel will indicate that whole long term up trend from 88.97 (00 low) has completed too and bring deeper decline to 149.27 key medium term support for confirmation. On the upside, above 170 psychological resistance is now needed to confirm underlying momentum. Otherwise, downside risks will continue to grow.

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