EURJPY extended Tuesday’s 1.3% loss to a new three-week low of 138.25 during the early European trading hours on Wednesday as the bearish technical signals remained well intact.
The RSI has further stretched its downfall below its 50 neutral mark, justifying negative sentiment in the market. Likewise, the MACD keeps decelerating below its red signal line, while the falling Stochastics are still above their 20 oversold level, signaling that the latest decline in the price is not overdone yet.
Despite the bearish vibes, the 50-day simple moving average (SMA) and the tentative ascending trendline drawn from the March low of 1.2438 could still act as a safety net against further depreciation today around 139.00. Such hopes could evaporate if the price slides below June’s low of 137.87, bringing the 38.2% Fibonacci retracement of the 124.38 – 144.24 uptrend into view at 136.65 instead. Falling below the latter, the pair could tumble towards the 50% Fibonacci of 134.31.
In order to eliminate negative risks and reinstate confidence in the bullish trend, the price will need to reclaim the 139.55 – 140.00 zone, where the 23.6% Fibonacci is also placed. If efforts prove successful, the bulls will push for a close above the 20-day SMA and the 142.00 level once again after failing to breach them this week. A durable move above those boundaries is expected to provide direct access to the crucial triple top at 144.20. Even higher, the door will open for the strong resistance line seen around 146.70 if the 145.00 psychological mark gives way.
Summarizing, EURJPY’s short-term outlook has turned gloomier following Tuesday’s plunge. A clear close below the trendline and the 50-day SMA could further bolster selling appetite.
