EURJPY violently cracked the 136.50 – 137.00 boundary after more than two weeks of consolidation to advance to a new seven-year high of 138.14 on Tuesday.
The door has now opened for the 138.90 resistance from August 2015, with the momentum indicators favoring additional bullish actions, though with some conservatism. Specifically, the MACD is trying to resume its positive direction above its red signal line, but the rising RSI and the fast Stochastics are entering the overbought region, warning that any further improvement could be constrained. Note that the price is currently looking for a close above the upper Bollinger band, making a slowdown likely in the coming sessions as well.
In the event the rally successfully overcomes the limits around 138.90, the next obstacle could pop up within the 140.65 – 141.00 zone from June 2015. Higher, the pair may push for a close above the 142.00 round-level with scope to reach the 143.30 barrier.
Otherwise, if the price erases its latest pickup, sinking back below 136.50, it may initially seek shelter near the 20-day simple moving average (middle Bollinger band) at 135.50 before heading for the 134.47 – 134.00 support area. A decisive step below the latter would downgrade the positive outlook to neutral, bringing the 132.60 on the radar.
In brief, EURJPY is expected to haunt fresh gains in the coming sessions, though whether the bulls will successfully knock down the wall at 138.90 remains to be seen.
