EURJPY has been trading sharply lower since the previous week, following the pullback from the more than a 2-year high of 137.50. Prices broke below the 133.00 handle over the last couple of sessions in the 4-hour chart and are trading below their moving averages. The bearish picture in the short-term is further supported by the technical indicators.
Looking at the 4-hour chart, momentum indicators are also pointing to a continuation of the bearish bias despite that the pair is moving slightly higher at the time of writing. The stochastic oscillator posted a bearish crossover within its moving averages, while the MACD oscillator is still holding in the negative territory. As a side note, in the daily timeframe, the 20-simple moving average is ready to create a cross to the downside with the 40-SMA, suggesting a downward pressure.
If price continues the sell-off, the next level to have in mind is the 23.6% Fibonacci retracement level of the up-leg from March 2017 to January 2018, which is slightly above the 132.00 significant psychological level and served as support only last week. Below that, the 131.40 level – another previous support area – comes into view.
Conversely, in case of an upward correction of the last aggressive bearish move, the price could re-challenge the 133.80 resistance level, which is near the 40-SMA. A break above the aforementioned obstacle, could open the door for the next immediate resistance of 134.20.
