Technical Analysis – EURJPY correction halts at key support area
- EURJPY is hovering around the 100-day SMA
- EURJPY bears have probably regained the upper hand
- Momentum indicators are mostly mixed at this stage
EURJPY is edging lower today, testing the support set by the 100-day simple moving average (SMA) and the 163.37-163.49 area. The rally from the mid-September low stopped at the March 7, 2022 upward trendline, with the 200-day SMA also proving strong resistance. A plethora of verbal interventions from Japanese government officials, which were triggered by the recent robust rally in EURJPY, and the strong details of the preliminary GDP report for the third quarter of 2024 have allowed EURJPY bears to reclaim the upper hand.
Meanwhile, momentum indicators are mostly directionless at this stage. Specifically, the RSI is hovering around its midpoint, without showing any appetite for a forceful move. Similarly, the Average Directional Movement Index (ADX) is trading lower, signaling the absence of a clear trend in EURJPY. On the flip side, the stochastic oscillator continues its downward trend, parallel to its moving average (MA), and thus revealing decent bearish pressure. A possible move above its MA could potentially signal the end of the current bearish move in EURJPY.
Should the bears remain confident, they would try to push EURJPY below the 163.37-163.49 area, which is populated by the 23.6% Fibonacci retracement level of March 7, 2022 – July 11, 2024 downtrend and 100-day SMA. The 50-day SMA is probably the last obstacle ahead of a more protracted selloff towards the February 22, 2007 high at 159.64.
On the other hand, the bulls could make another effort to retake the market reins and keep EURJPY above the 163.37-163.49 region. If successful, they could test the resistance set by the 164.91-164.94 area, which is defined by the April 23, 2008 and November 16, 2023 highs, and the 200-day SMA. Then, the March 7, 2022 trendline could be the most crucial test of the bulls' drive on their way higher.
To sum up, EURJPY bears have regained the upper hand, but they must overcome some key support levels in order to feel comfortably in control.
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