EUR/JPY Weekly Outlook

EUR/JPY's down trend from 169.69 extended further to as low as 159.21. From a short term angle, further decline is still expected as long as 162.00 resistance holds. Next target is key support level at 158.60 (61.8% retracement of 151.71 to 169.96 at 158.68). Sustained break will bring deeper fall to next support at 151.71. On the upside, above 162.00 resistance will indicate that a short term bottom is finally in place and bring stronger rebound towards 165.32 support turned resistance.

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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