EURJPY refused to return to the 117.00 area, reversing up instead to recoup the lost ground from the 118.50 peak on Tuesday.
Technically, the short-term risk is currently looking positive as the price is trading above its 20- and 50-day simple moving averages (SMAs), while in momentum indicators, the RSI and the MACD are encouraging too as the former is comfortably hovering above its 50 neutral and the latter is gaining strength above its zero and signal lines.
Yet, for a meaningful bullish correction the pair needs to stretch above its previous high of 118.50, and particularly close decisively above the 50% Fibonacci of the 122.86-114.42 down leg and the upper surface of the Ichimoku cloud around 118.65. If so, the market could continue to improve until the 61.8% Fibonacci of 119.63, where another winning battle may boost buying forces towards the March high of 121.13.
Alternatively, if the price dives below 117.00, the area around 116.40 – where the 20-day SMA, the 23.6% Fibonacci and the blue Kijun-sen line are currently converging – could act as immediate support to stop the sell-off from testing the 115.40 barrier. If the bears persist, the door would open for the 3 ½-year low of 114.42
Meanwhile in the medium-term picture, the bearish trend is fading as the price is pushing efforts to make higher highs above 117.75. Another peak above 118.50 would confirm a neutral outlook.
Summarizing, EURJPY is expected to trade bullish in the short-term, though only a rally above 118.65 may prove game changing.