EURJPY opened the week with a doji candlestick slightly lower than the 20-day SMA at 156.30, following its rebound from the March support trendline.
The trendline bounce indicates the positive trend will persist, yet Monday’s doji candlestick may bring doubt. In momentum indicators, the RSI is maintaining a negative trajectory despite climbing back above its 50 neutral mark. The MACD is within the positive zone and comfortably below its red signal line, while the stochastic oscillator is nearing its 80 overbought level.
Given the mixed signals, traders may stay on the sidelines unless the price closes above the 20-day SMA and the 156.30 bar or falls below the 154.70 -153.70 trendline area.
In the first case, the price could accelerate towards its 15-year highs and the 158.00 bar. A successful move above the ascending line from January 18 at 158.85 could lift the price towards the 160.00 psychological mark. If this proves an easy obstacle too, the price could chart a new higher high somewhere between 162.50 and 163.00. This is where the bulls faced rejection in August 2008.
In the bearish scenario, where the pair slides below 153.70, the spotlight will fall on the 50-day SMA at 152.60. Should the sell-off stretch below May’s peak of 151.60, the next pivot could take place around the 150.00 round level.
All in all, EURJPY is waiting for its next directional catalyst. A step above 156.30 is expected to strengthen buying forces, while a correction below 153.70 could display early signs of a bearish trend reversal.