- EURJPY trims January’s gains within bullish channel
- Short-term risk skewed to the downside
EURJPY started a new bearish cycle within a short-term upward-sloping channel, pulling from a one-and-a-half month high of 161.85 to reach a low of 159.20 on Tuesday.
Technically, the 78.6% Fibonacci retracement of the previous downleg halted January’s rally, with the 20- and 50-day exponential moving averages (EMAs) currently trying to prevent additional declines below the 159.00 mark. That said, the negative trajectory in the RSI and the MACD is reducing the odds for an upside reversal, especially after the close below the 160.00 constraining zone and the 61.8% Fibonacci level on Monday.
Hence, the 158.34-158.64 region formed by November’s broken resistance trendline and the 50% Fibonacci number could be the next target on the downside. A close lower could press the price straight to the channel’s bottom seen near the 38.2% Fibonacci of 157.34, while beneath that, the focus would shift to the 200-day EMA at 155.73 and around the 23.6% Fibonacci.
If the bulls manage to run back above the 160.00 mark, they may stage another battle near the 78.6% Fibonacci of 161.80 and the channel’s upper band at 162.30. A successful penetration higher could lose steam near November’s ceiling of 163.70-164.28. Should the rally continue, the pair could advance towards the resistance trendline, which connects the highs from June and November 2023 at 167.50.
Summing up, EURJPY is expected to lose more ground in the coming sessions, with support likely coming next within the 158.34-158.64 region.