EUR/JPY traded slightly higher today, after hitting support at 129.15, but it thereafter found resistance at 129.75 and turned sideways. Overall, the pair is trading above the prior downside resistance line drawn from the high of June 16th, and thus, we would consider the short-term outlook to be cautiously positive.
In order to get confident on more advances though, we would like to see a break above the key resistance of 129.75, or even better, above the round figure of 130.00. This will confirm a forthcoming higher high on the 4-hour chart and may initially pave the way towards the high of July 29th, at around 130.55. If the bulls are not willing to stop there, then we could see them aiming for the high of July 13th, at 131.10, the break of which could carry extensions towards the 131.85 barrier, near the high of July 6th.
Shifting attention to our short-term oscillators, we see that the RSI is slightly below 70, but points flat, while the MACD, although positive, runs slightly below its trigger line, pointing sideways as well. Both indicators detect positive price momentum, but the fact that they point sideways adds credence to our choice to wait for a move above 130.00 before getting confident on larger advances.
The move that would make us turn our gaze back to the downside is a dip back below 128.60. This would confirm the rate’s return back below the aforementioned downside line and may initially target the 127.95 zone, which supported the price action on August 19th and 20th. A break below that zone would confirm a forthcoming lower low on both the 4-hour and daily charts and may pave the way towards the 127.50 or 127.10 levels. If neither is able to stop the decline, then we could see extensions towards the 126.45 barrier, defined as a support by the low of February 9th.
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