EURJPY posted another lower low at 119.81 after crossing below the trendline that has been supporting the rebound from the 3½-year trough of 114.42, raising speculation that the market may keep trending within a downward-sloping channel. The break below the Ichimoku cloud and the RSI’s bearish location is another discouraging signal.
Currently the 120.50 former support area and the red Tenkan-sen line are restricting upside movements and should they push the price below the 120.00 level, negative momentum could strengthen towards 119.40, taken from the lows on June 1. Beneath the latter, the 200-day MA and the bottom of the channel could provide a stronger footing to the sell-off.
On the upside, a decisive close above the channel (121.30) is required to violate the short-term downtrend and trigger a sustainable rally that may initially stall around 122.00. Yet, for that to happen, the ascending trendline and the 20-day MA at 120.86 should give way first.
In brief, EURJPY is expected to trade bearish within a descending channel in the short-term, but increasing its losses below 120.00