EURJPY Retreats after Reaching 7-week High

Technical analysis of Forex market

EURJPY is on the sidelines after it reached a fresh seven-week high around 124.28 and it looks ready for a possible pull back. Technically, the RSI is returning lower after it climbed to the overbought zone, while the stochastic is heading south, both hinting for a downside retracement in the very short-term. Despite those signals, the short-term simple moving averages and the Ichimoku indicator are still suggesting an upside tendency.

Immediate support to further declines may be taking place around the red Tenkan-sen line at 123.67 and the 20-period SMA at 123.28, while the 123.00 handle could provide additional support in case of stepper losses. Below that, the 40-period SMA at 122.77 and the 122.44 barrier could attract attention.

A move to the upside may meet resistance around the one-year high of 124.45. More upside pressure could open the way for the April and February 2018 peaks at 126.80 and 127.50 respectively.

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The medium-term picture is looking predominantly bullish at the moment, with price action taking place above the moving average lines, as well as above the Ichimoku cloud.

Overall, both the short- and medium-term outlooks are currently looking bullish, though caution is warranted in the near-term as there are signs of an overbought market.