EUR/JPY traded higher yesterday and today, after hitting support slightly above the 129.15 barrier. Overall, the pair has been printing higher highs and higher lows since March 7th, while on March 9th, it broke above the downside resistance line drawn from the high of February 10th. In our view, this paints a positive short-term picture.
At the time of writing, the rate is testing the 130.28 barrier, marked by the high of February 25th, the break of which could initially target the 130.75 zone, defined by the peak of February 22nd. If the bulls are not willing to stop there, then a break higher could carry larger bullish implications, perhaps setting the stage for advances towards the 131.90 zone, marked by the high of February 16th, or even towards the 132.30 territory, marked by an intraday swing high formed on February 11th. If neither hurdle is able to stop further advances, then we may see a test at the high of the day before, at around 133.15.
Turning gaze to our short-term oscillators, we see that the RSI just ticked above its 70 line, while the MACD runs well above its zero line, but slightly below its trigger. This makes us careful that a small setback may occur before the next leg north.
However, in order to start examining the case of a strong correction lower, we would like to see a drop below 129.15. This could allow a slide towards the low of March 11th, at 127.80, or the low of the day before, at 127.37. If the bears are not willing to stop at neither barrier, then we could see them diving towards the 126.75 barrier, marked by the inside swing peak of March 8th.
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