Yesterday, EUR/JPY moved strongly to the upside, after the ECB press conference. The pair broke above its short-term downside resistance line, taken from the high of March 25th, and drifted further north, where the rate ended up testing the 200 EMA on the 4-hour chart. Currently, EUR/JPY is stalling slightly below the 200 EMA. That said, given that the pair is forming a possible bullish flag pattern, we will remain cautiously-bullish, as we would still need to see a clear break above yesterday’s high, before getting comfortable with higher areas.
A push above the 117.77 barrier, which is the high of yesterday, would confirm a forthcoming higher high and more buyers could join in. The rate may then accelerate to the 118.38 obstacle, which if broken might clear the path to the 119.03 level. That level marks the highest point of April.
Looking at the RSI and the MACD on our 4-hour chart, we notice that both are currently somewhat flat. However, the RSI remains above 50 and the MACD is above its zero and trigger lines. Both oscillators seem to be in support of the cautiously-bullish scenario, for now.
Alternatively, if the pair suddenly falls all the way back below the 116.50 territory, which is the high of April 27th, this could totally spook the bulls from the field in favour of the bears. EUR/JPY might then drop to the 116.08 obstacle, a break of which may lead the rate further south. The next possible support area to consider could be at 115.45, marked by the lowest point of April.
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