Fri, Jun 02, 2023 @ 22:59 GMT
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EURJPY Increasingly Bearish After Break Below 130

EURJPY’s outlook has turned increasingly bearish following a retreat from the August 30 high of 131.70. Technical signals on the 4-hour chart are bearish. The market has fallen below the Ichimoku cloud while the Tenkan-sen has crossed below the Kijun-sen line. Momentum oscillators like RSI and MACD are in bearish territory.

EURJPY has entered a consolidation phase between 129.35 and 129.70 since the big drop below the key psychological level of 130.00 yesterday. RSI is horizontal and indicates that EURJPY is entering a neutral phase. But the indicator is below 50, highlighting overall bearishness in the market. MACD is below zero and sloping down, showing risk is tilted to the downside. Another leg lower would target support at the 61.8% Fibonacci retracement level of the 129.70 to 131.70 upleg. This level lies at 129.13. From here downward pressure would increase for a move towards 128.35 before reaching the August 18 low at 127.55. Such a move would result in a complete retracement of the uptrend from 127.55 to 131.70 and also shift the medium-term view which has been neutral on the daily chart (above 127.55).

The market is at a critical level at the moment as it is being capped by the 50% Fibonacci. Only a move above it and through 130.00 would indicate that downside pressure has eased. Rising above the cloud top at 130.90 would shift the focus to the upside for a re-test of the top at 131.70. From here there would be a resumption of the uptrend that started from 129.70.

Sideways trading is expected in the immediate term but the bearish technical signals on the 4-hour chart indicate risk is to the downside.
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