EUR/JPY traded slightly higher today, after hitting support at the 130.15 level. Overall, the pair remains above the upside support line drawn from the low of December 20th, and thus, we would consider the short-term outlook to be positive.
That said, in order to get confident on more advances, we would like to see a clear break above the peak of December 29th, at 130.60. This will confirm a forthcoming higher high on the 4-hour chart and may allow advances towards the 131.40 barrier, marked by the high of November 10th, or the 131.75 zone, defined by the inside swing low of November 3rd. If the bulls are not willing to stop there, then a break higher could carry more bullish implications, perhaps paving the way towards the high of November 4th.
Looking at our short-term oscillators, we see that the RSI turned up after hitting support slightly above its 50 line, while the MACD, although below its trigger line, runs positive and shows signs that it could start bottoming soon. Both indicators suggest that the rate may start picking up upside momentum again soon, and add some support to the case of a trend continuation.
In order to abandon the bullish case and start examining a short-term reversal, we would like to see a drop below 130.15. This could confirm the break below the aforementioned upside line, and may initially target the low of December 28th, at 129.60. Another break, below 129.60 could extend the fall towards the 129.05 barrier, marked by the low of December 23rd, where another break could see scope for extensions towards the low of December 22nd, at 128.55.
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