EURJPY is revisiting the descending trend line, which has been standing since January 16, despite the upside break at the end of March. The bullish picture in the very short-term looks to last for a while longer if prices overcome the critical line and the 40-day simple moving average (SMA).
The positive bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has risen sharply near overbought levels after it posted a bullish cross with the %D line. Also, the RSI is flatlining above the 50-neutral level, suggesting any upside correction would be weak but the MACD oscillator jumped above its trigger line in the negative territory.
In case of a successful upside rally, the price could rest near the 38.2% Fibonacci retracement level of the down leg from 122.90 to 114.40 at 117.63 and the 117.75 barrier. More advances could drive the market at the 50.0% Fibonacci of 118.63, while steeper increases could flirt with the 119.00 handle and the 100-day SMA. Above these lines the 61.8% Fibo at 119.62 waits for any pauses of the bullish move.
On the other hand, a retreat could find immediate support at the 23.6% Fibo at 116.40 and the 20-day SMA currently at 116.10. Below that, the 115.30 and the 114.40 support levels are coming next taken from the latest troughs in the near term. Moreover, the low from November 2016 at 113.70 could halt downsides extensions.
To sum up, EURJPY seems to be bearish, however, any upside violation of the downtrend line may change this outlook to neutral-to-bullish.
