EURJPY is losing ground after succeeding to move below the key support level of 120.34, setting lower highs and lows in place as it approaches the 200-period simple moving average (SMA). Supporting the move is the bearish cross of the 100-period SMA by the 40-period one and the recent turn lower in their slopes.
The technical indicators are reflecting conflicting views, as the Stochastics are climbing out of the oversold territory, while the MACD and RSI remain in the bearish region. The MACD is marginally below its red trigger line, while the RSI has turned down, still holding below the trendline. Noteworthy is the nearby 200-period SMA and other SMAs heading towards it, which could consolidate the pair in the 120.34 to 119.73 area.
If sellers persist, the swing low of October 16 coupled with the 200-period SMA at 119.73 could be first to challenge further declines. Piercing below could lead to price tumbling to test the low of 119.10. Overcoming this, the 118.75 support and 118.46 level – which is the 23.6% Fibonacci retracement of the down leg from 126.80 to 115.85 – could apply some pressure ahead of 118.08.
To the upside, if buyers steer back above the 120.34 resistance, the slightly higher 40- and 100-period SMAs at 120.50 and 120.70 respectively, could cap attempts of an ascent. If surpassed, the swing high of 121.10 could hinder the up move towards the resistance area of 121.33 – 121.46, where recent peaks and the 50.0% Fibo reside.
Summarizing, the short-term bias looks bearish-to-neutral. Yet, a break below the 200-period SMA would confirm a bearish bias, while remaining above would increase the odds of a revival of the positive outlook.
