Technical Analysis – Can EURJPY carry on recording higher highs?

Nov 7, 2023 at 8:29 am GMT- Achilleas Georgolopoulos

• EURJPY makes new 15-year high

• Intervention threat has not dented bullish appetite

• Bullish momentum indicators but exhaustion signs appear

EURJPY is edging higher today, trying to record its fourth consecutive green candle. It has made a new 15-year high after finally managing to surpass the 159.64 level that has greatly been troubling the bulls over the past three months. Last week’s BoJ meeting announcements and the intervention threat do not seem to dent the bullish appetite.

Turning to the momentum indicators and there is strong support for the current upleg. In more detail, the Average Directional Movement Index (ADX) is edging higher, far above its 25-threshold, and signaling a strong bullish trend in the market. Similarly, the RSI remains above its midpoint and close to a 4-month high. More importantly, the stochastic oscillator has rejoined its overbought territory, confirming the current bullishness in the EURJPY. However, the higher high in this currency pair has been met by a lower high in the stochastic and thus raises questions about the viability of the current upleg.

Should the bulls ignore the intervention threat, they would aim to keep EURJPY above 159.64 and record a new higher high on a daily basis. They could gradually try to push EURJPY towards the April 23, 2008 high at 164.97.

On the other hand, the bears are desperately trying to recoup part of their losses. They could attempt to push EURJPY back below the February 22, 2007 high at 159.64 and then test the support set by the busy 157.55-158.12 area. This is defined by the June 28, 2023 high and the 50- and 100-day simple moving averages (SMAs). If successful, the bears could have a go at reaching the October 3, 2023 low at 154.35.

To sum up, EURJPY bulls remain in control of the market and are recording multiple higher highs despite the intervention threat and the stochastic oscillator showing some early signs of rally exhaustion.