EURJPY has been struggling to retain strength above the 123.75 resistance area over the past three days, and therefore unable to touch the 13-month high of 124.42.
Some weakness is visible in momentum indicators, flagging that the pair could face downside pressure in the short-term; the RSI and the Stochastics seem to have found a turning point in the overbought territory, while the MACD has been rising at a softer pace lately.
Still, sellers may not take control unless the steep ascending trendline that halted Friday’s downfall gives way around 123.00. If it proves easy to break, the price could decelerate towards the 20-day simple moving average (SMA) and the 23.6% Fibonacci retracement of the 114.42-124.42 upleg, both around 122.00. The 38.2% and 50% Fibonacci levels of 120.60 and 119.42 respectively could come next into focus, though the latter may attract greater attention as any close lower would confirm a bearish double top pattern and signal a trend continuation to the downside.
Alternatively, if the trendline holds firm, the price may attempt to push above the 124.42 peak and up to 125.00. Higher, the 126.55 area managed to stop the market action several times in the past and therefore would be closely watched as well.
In brief, EURJPY is looking cautiously bullish in the short-term as technical indicators are flashing overbought conditions. The upward-sloping trendline could ease worries of a downside reversal if it manages to add footing once again.
