EURJPY fell aggressively, after breaking below the 50-day simple moving average (SMA) and the 120.77 then support, further past the 120.04 inside swing low to a 2-year low of 117.66 in the last week. The move filled the gap from back in April of 2017. After a pullback, the price lost its steam and now sits on the middle Bollinger band.
The MACD crossed above its red trigger line in the negative region but has started to flatten, whereas the RSI hovers below the neutral 50 level slightly pointing up. Furthermore, the Bollinger outer bands are flat, also suggesting a short-term sideways move.
If sellers come on board again and move below the mid Bollinger band, initial support is found at the area of 118.58 – 118.54, which is the January 3 low and the 23.6% Fibo respectively. Falling lower may see a pause at the lower band before revisiting the 2-year low of 117.66. A collapse of the 117.66 level could have the lows of October 2016 unfold.
To the upside, immediate resistance comes at the 119.00 psychological level before 119.52, which is the 50.0% Fibo retracement level of the down leg from 121.36 to 117.66. Pushing higher, the region 119.96 to 120.05 could bring adequate hindrance where the 50-day SMA also happens to rest. If breached and another run up unfolds, focus moves to the 120.50 level, which is the 76.4% Fibo, before the 120.77 resistance and 121.36 swing high can be considered.
Summarizing, the bearish bias overwhelms, but a move above the 121.36 swing high would turn the short-term bias neutral.
