EUR/JPY traded higher on Friday, breaking above the 124.87 resistance (now turned into support) territory, marked by Wednesday’s and Thursday’s peaks. The move has confirmed a forthcoming higher high, which, combined with the fact that the rate has been trading above an upside support line since September 28th, paints a positive near-term picture.
If the bulls are willing to stay in the driver’s seat, we could see them targeting the 125.28 territory, the break of which could extend the rally towards the 125.90 area, defined as a resistance by the high of September 14th. The bulls may decide to take a break after hitting that zone, thereby allowing the rate to correct lower. However, as long as it would be trading above the aforementioned upside support line, we would see decent chances for another leg north. If, this time, the 125.90 hurdle is broken, the next resistance to consider may be at 126.45, marked by the peak of September 10th.
Looking at our short-term oscillators, we see that the RSI lies above 50 and points up. However, the MACD, although positive, lies below its trigger line and points east. Both indicators detect positive momentum, but the fact that the MACD is flat below its trigger line suggests that it may be better to wait for a break above 125.28 before getting confident on larger bullish extensions.
On the downside, a break below 123.85 may be the move that could wake up the bears. The rate would already be below the upside support line and may initially fall towards the 123.10 territory, near the low of October 2nd. Another break, below 123.10, may extend the decline towards the 122.58 barrier, which provided decent support between September 21st and 25th, or towards the 122.38 level, which is marked by the low of September 28th.
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