EURJPY resumed its positive momentum on Tuesday after a neutral start to the week with scope to test the descending trendline drawn from June’s 3 ½-year high and the 130.00 mark, which proved hard to claim yesterday.
A sustainable move above the trendline would signal further continuation of last week’s rebound, which took place exactly where the summer sell-off paused in August, creating a sort of double bottom pattern around 127.92. Hence, if traders monitor this bullish structure, they will probably wait for confirmation to come above the 130.50 neckline in order to boost buying orders towards the 131.00 -131.32 restrictive region. Beyond that, the next stop could be around the 132.00 psychological level.
Technically, the short-term risk is tilted to the upside, backing the above scenario. The price has jumped into the bullish upper Bollinger band area, the RSI is rising with a steep positive slope above its 50 neutral mark, and the MACD, although in the negative region, is strengthening above its red signal line.
Nevertheless, if bullish forces prove unsuccessful in breaching the trendline, with the price pulling below the nearby support of 129.75, the 129.00 mark could be the last opportunity for a rebound before all eyes turn to the 127.92 bottom.
In brief, EURJPY seems to be at a make-or-break point. A clear step above 130.00 could produce additional upside corrections, though only a fresh higher high above 130.50 would add credibility to the latest rebound. Otherwise, a new bearish wave could start below 129.75.