EURJPY recorded a stunning rally towards an 18-month high of 126.83 after finding strong support at the 20-day simple moving average (SMA) and the rising trend line several times in the preceding days.
The RSI is currently increasing positive momentum towards its 70 level, while the MACD is strengthening its movement and is trying to post a bullish crossover within its trigger line. Moreover, the moving averages are continuing to slope north.
Should the market extend the pair’s gains , resistance could be met near the 127.50 barrier. A significant leg above this area could send prices towards the December 2018 high at 129.25.
On the flip side, if the pair pulls back, immediate support could come at the 20-day SMA and the ascending trend line around 125.50. Stepper decreases though could drive the market south towards the 124.45 – 123.94 support area, which encapsulates the 23.6% Fibonacci retracement level of the up leg from 114.40 to 126.83 and the 40-day SMA.
In the bigger picture, the pair is bullish as long as it holds above the four-month uptrend line. In case it violates this line, the bears could take the upper hand, shifting the view to neutral.
