EURJPY is in a neutral phase after the recent rally off the 113 area was exhausted and found strong resistance at the key 136 level. Short term price action is expected to continue sideways if the market fails to break out of the current consolidation range very soon.
Looking at the 4-hour chart, the RSI is neutral, indicating a lack of momentum in the market. If EURJPY trades above 135 for an extended period of time then the odds will increase for a move higher and a break out of the current consolidation range.
A move above 136 would open the way for a re-test of the January 5 high of 136.63 and a break from here would confirm the longer-term bullish trend, with scope to rise to levels not seen since 2015.
To the downside, breaking 135 support could yield additional losses towards 134 and 133 and consequently erasing the recent bullish phase from January 11.
In the near term, there is limited downside risk and the EURJPY is expected to remain supported above 135 in a sideways pattern awaiting a catalyst for a move that would take the market out of the range. The 133-136 uptrend has not shown signs of a reversal yet.
