EURJPY has turned neutral in the short-term after the rally to 134.16 stalled. This was the highest level since December 2015. The momentum oscillators on the 4-hour chart are flat and are pointing to range trading for now in the upper 133.00 handle. Meanwhile, the RSI reached 70 which is indicative of an overbought market.
The Ichimoku cloud analysis shows that the broader bullish trend in EURJPY remains intact and is well-supported by a bullish alignment of the Tenkan-sen and Kijun-sen lines. Immediate support is being provided by the Tenkan-sen at around 133.70. Failure of support here would result in a corrective move of the pair’s recent gains.
Another support is expected at yesterday’s low of 133.26 ahead of the key 133.00 level. Below this the Kijun-sen line could be seen as a possible support level at 132.38. Another leg lower would target the round level at 132.00. More weakness in the market and a deeper correction in EURJPY would indicate the current bullish phase has ended.
A break above the 134.16 high would act as a catalyst for a move higher towards the next major top at 134.58 (from November 2015).
Based on the momentum indicators, more range trading seems the most likely prospect for EURJPY in the near term. As long as the market remains above 133.00 the outlook will stay bullish