EURJPY charted a higher high at a 13-month peak of 124.42 early this month, increasing speculation that the long-term downtrend started in 2018 has reached a bottom.
Although the peak took the form of a bearish doji in the end of the day, pressuring the price to 120.24 in the subsequent sessions, the 20-day simple moving average (SMA) and a steep ascending trendline drawn from the 114.42 low managed to halt the downfall this week and push the price back north.
With the MACD decelerating below its red signal line and the RSI having already topped above its 70 overbought mark, downside pressures are possible in the short-term. The 23.6% Fibonacci of the latest upleg at 122.00 and the 122.60 barrier could be responsible for that if they keep acting as resistance, shifting the spotlight back to the 38.2% Fibonacci of 120.60 and the 20-day SMA. If the latter fails to hold this time, with the price retreating below the trendline, the short-term bias would switch to bearish and support could be next found near the 200-day SMA and the 50% Fibonacci of 119.43. A steeper decline could also target the 61.8% Fibo of 118.23 and the 50-day SMA.
Alternatively, if the rebound stretches above 122.60, the bulls would aim for a close above the 123.72 key resistance, which could open the way towards the 124.42 high. Additional upside corrections would strengthen hopes of an up-trending market, bringing the 126.00-126.80 restrictive area next into view.
Summarizing, EURJPY may face some pressure in the short-term despite the latest rebound, with the bias expected to turn bearish below the 20-day SMA and positive above 123.72.
