EURJPY posted an impressive bullish rally in the previous couple of days, moving towards the six-and-a-half year high of 137.50. The pair found strong support at the 134.25 barrier and the 23.6% Fibonacci retracement level of the up leg from 124.45 to 137.50 at 134.43.
The technical indicators are currently feeding prospects for a possible negative short-term the RSI holds well above 50 but found an obstacle near the 70 level, while the MACD continues to strengthen in bullish territory and below its red trigger line. Also, in Ichimoku indicators, the red Tenkan-sen is pointing down, holding above the blue Kijun-sen.
If the price fails to overcome the six-and-a-half year high of 137.50, a challenging point over the previous month, it would run towards the 139.00 round number, taken from the peak in August 2015. On top of that, the bulls would need to clear the 140.70 barrier, registered in June 2015.
Alternatively, a dive could hit the immediate 134.25-134.43 support, which encapsulates the 20-day SMA. Lower support could be next found around the 133.15-133.50 barrier, while a close below the 38.2% Fibonacci of 132.50 could stage a steeper sell-off until the 50.0% Fibonacci of 130.97.
In the short-term picture, EURJPY turned positive after the rebound off 124.45 by forming a higher high. Should the market continue the upward pattern, the outlook may turn brighter. A run above 137.50 would turn the outlook strongly bullish.