EURJPY has returned to the 116.35 low after sellers capitalised on the fact that the pair was unable to close above the 118.59 level – that being the 23.6% Fibonacci retracement of the down leg from 127.49 to 115.86 – and the mid-Bollinger band.
The short-term oscillators also reflect the recent deterioration in the pair. The MACD, in the negative region, is falling back below its red trigger line, while the RSI is also gradually dropping in the bearish zone. Moreover, the stochastics have entered the oversold territory, suggesting further declines, though with their flattened demeanour, traders need to be cautious in case buying interest picks up.
A push initially under the 116.35 latest low could test the six-month substructure of 116.11 before the 28 ½-month foundation of 115.86 draws focus. Clearing this congested support region of 116.35 to 115.86 – cementing the reversal back down from the 119.00 vicinity – the lower Bollinger band, presently around 115.60, could impede the drop extending towards the 114.84 support from April of 2017.
Otherwise, if buyers manage to steer back up, the 117.93 obstacle could be first to apply resistance ahead of the mid-Bollinger band around 118.05. Pushing past this, the 23.6% Fibo of 118.59, which limited the climb in the past, the restricting 50-day simple moving average (SMA) at 118.71 and the 119.03 swing high, could deter the pair from reaching the 200- and 100-day SMAs around 119.57 and 119.87 respectively.
Summarizing, the short- and medium-term biases continue to paint a neutral picture confined within the 122.86 and 115.86 boundaries. However, initial breaks above 119.03 or below 116.11 would be required to revive and resume a direction.
