EURJPY overcame the key 127.49 barrier yesterday but is marginally struggling to extend gains ahead of the 128.38 level, which happens to be the 123.6% Fibonacci retracement of the down leg from 127.06 until 121.61. The upward sloping Ichimoku lines are reflecting a surge in positive momentum, while the gradually climbing simple moving averages (SMAs) are assisting the advancing structure.
The short-term oscillators are also conveying strengthening positive momentum. Nevertheless, the slight stalling of the %K line in the overbought territory reflects a minor pause in the pair. Still, the %K line has yet to confirm any negative tendencies in the price. The MACD is rising above its red trigger line in the positive section, while the climbing RSI is nearing the overbought level of 70.
To the upside, resistance may originate from the 123.6% Fibo extension of 128.38. Conquering this barrier, the price could then thrust to meet the 129.24 high, where the pair collapsed back in December 2018. Should a bullish chain reaction unfold, the pair may propel to challenge the 130.19-130.50 resistance section from mid-October to early September 2018.
However, if the price pivots down, support could commence from the 127.49 level (previous resistance-now-support), which curbed gains in earlier sessions. Dipping beneath this, quick downside limitations could arise from the red Tenkan-sen line at 127.22 until the 50-day SMA, currently around 126.45, before the bears test the 126.09 trough. If the price fades further, the support base of 125.00-125.25 may attempt to halt additional loss of ground.
Summarizing, EURJPY is sustaining a bullish tone above the Ichimoku cloud, the SMAs and the 126.09 low. In addition, the broader improving picture remains intact above the 125.00-125.25 foundation.