EURJPY has been edging higher since mid-June after bouncing from a low of 122.38. The pair hit a high of 128.95 yesterday, recording its highest level since February 2016.
The RSI indicator’s move lower is indicative of fading upside momentum in the market, although it still remains above 50 in bullish territory and currently maintains a steep positive slope.
The market is entering a consolidation phase following the strong uptrend that stopped short of a key resistance and psychological level at 130.00.
Looking at the 4-hour chart, prices are finding support near the 20-period moving average around 128.33. This level has been an area of congestion since the end of June and EURJPY has been pivoting around it since then, now making it an important support level. Further support comes into view at 127.43 (June 30 low) and then 126.45 (June 28 low). Any deeper declines from here would start to weaken the short-term bullish market structure.
For now, there are no signals of a shift in the bullish bias. This view is also asserted by the positively aligned moving averages. The short-term 20-period MA is above the longer-term 50-period MA. Support at 128.33 seems to be holding firm. A bounce higher would see a re-test of the high at 128.95 with scope to target the key 130.00 psychological level.
EURJPY is expected to consolidate in the near term while maintaining a bullish short-term market structure. A move below 125.65, which is the 50% Fibonacci retracement level of the rise from 122.38 to 128.95 would change the trend
