EUR/JPY Rebounds from Near 131.60; Hits Resistance at 132.10

EUR/JPY traded higher during the early European morning Wednesday, after it hit support near 131.60 on Tuesday. However, the pair hit resistance at 132.10 and retreated again. On the 26th of April, the rate exited to the downside an ascending wedge formation and since then, the price structure has been of lower peaks and lower troughs. Therefore, we see a negative near-term picture.

If the bears manage to take charge from current levels, then we would expect them to aim for another test near the 131.60 hurdle and if they prove strong enough to overcome it, they may set the stage for our next support of 131.10. A dip below 131.10 could target the 130.85 barrier.

Shifting attention to our short-term oscillators, we see that the RSI, even though it just turned somewhat down, it recently rebounded from near its 30 line. The MACD lies within its negative territory but shows signs of bottoming and that it could cross above its trigger line soon. Having these momentum indicators in mind, we stay cautious that another recovery may be in the works before, and if, sellers decide to seize control again.

A clear move above 132.10 could confirm the notion and could pave the way for the crossroads of the 132.55 level and the tentative downside resistance line drawn from the peak of the 24th of April. That said, even if this is the case, we would still see a decent likelihood for the bears to jump in near the 132.55 barrier.

We would like to see a break above the aforementioned crossroads before we abandon the bearish case, at least for the short run. Such a move could initially aim for the 132.90 barrier, the break of which may see scope for extensions towards the next resistance of 133.25.