EUR/JPY traded higher yesterday and today, after hitting support slightly above the 129.15 barrier. Overall, the pair has been printing higher highs and higher lows since Mar. 7, while on Mar. 9, it broke above the downside resistance line drawn from the high of Feb. 10. In our view, this paints a positive short-term picture.
At the time of writing, the rate is testing the 130.28 barrier, marked by the high of Feb. 25, the break of which could initially target the 130.75 zone, defined by the peak of Feb. 22. If the bulls are not willing to stop there, then a break higher could carry larger bullish implications, perhaps setting the stage for advances towards the 131.90 zone, marked by the high of Feb. 16, or even towards the 132.30 territory, marked by an intraday swing high formed on Feb. 11.
If neither hurdle can stop further advances, we may see a test at the high of the day before, at around 133.15. Turning gaze to our short-term oscillators, we see that the RSI just ticked above its 70 line, while the MACD runs well above its zero line but slightly below its trigger. This makes us think that a small setback may occur before the next leg north.
However, to start examining the case of a substantial correction lower, we would like to see a drop below 129.15. This could allow a slide towards the low of Mar. 11, at 127.80, or the low of the day before, at 127.37. If the bears are unwilling to stop at either barrier, we could see them diving towards the 126.75 barrier, marked by the inside swing peak of Mar. 8.
