Looking at the broader picture of EUR/JPY, on the daily chart, we see that the pair has been oscillating within a very wide sideways range, between 116.35 and 121.15, since January 24th. That said, zooming in to the 4-hour chart, we can see that after hitting the lower end of that range on April 2nd, the rate started printing higher highs and higher lows above a short-term upside support line. Thus, although the broader outlook remains neutral, we see decent chances for the rate to continue trading higher in the near-term.
A decisive break above 118.83 could confirm the case and may allow the bulls to climb towards the peak of March 31st, at around 119.70. They may decide to take a small break after testing that zone, thereby allowing the pair to correct slightly lower, but as long as it would be trading above the aforementioned upside line, we would see decent chances for another leg north. If the bulls manage to overcome the 119.70 zone this time around, we could then see them setting the stage for the 120.34 hurdle, marked by an intraday swing high formed on March 27th.
Taking a look at our short-term oscillators, we see that the RSI rebounded from near its 50 line, and now points slightly higher. However, the MACD although positive, lies fractionally below its trigger line and points sideways. Both indicators detect positive momentum, but the fact that the MACD remains flat below its trigger line, adds more credence to our choice to wait for a break above 118.83 before getting confident on larger bullish extensions.
On the downside, we would like to see a clear dip below 117.93 before we start examining whether the bulls have dropped their swards. Such a move would probably confirm the break below the pre-discussed upside line and may initially pave the way towards Tuesday’s low, at around 117.48. Another break, below 117.48, may extend the slide towards the low of April 3rd, at around 116.74.
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