EURJPY had an impressive start to the week, but despite its bold bullish correction up to a one-month high of 138.96, the pair could not exit the bearish channel nor could it close above the 50-day simple moving average (SMA) at 139.00.
Although the MACD keeps pushing towards the positive territory and the stochastics remain positively charged, the RSI suggests that some caution is warranted as the indicator is struggling to overcome its July high.
Should buyers breach the wall at 139.00, resistance could immediately commence somewhere between the 23.6% Fibonacci retracement of the 124.38 – 144.26 upleg at 139.57 and the 140.00 round level. Slightly higher, some congestion may develop within the 141.00 – 142.00 region before the way clears towards the 7½-year high of 144.26.
If the bears take charge soon below the inside swing of 138.39, the 20-day SMA and the 38.2% Fibonacci of 136.67 may attempt to prevent any depreciation towards the 135.00 mark and the 200-day SMA currently intersecting the 50% Fibonacci of 134.32. In the event the sell-off further exacerbates from here, the bears may push for a downtrend resumption under the key support area of 133.15 – 132.70 with scope to reach the channel’s lower boundary around the 61.8% Fibonacci of 130.70.
Summing up, EURJPY is looking cautiously bullish as the price is fighting for an upside channel breakout for the second consecutive day. If efforts prove successful this time, the next barrier could pop up within the 139.57 – 140.00 territory. Otherwise, the next move could be south at 136.67.
