Chart of the week – EUR/JPY
EUR/JPY rebounded from key support
Short-term technical analysis
Source: CMC Markets
- Since its 18 March 2021 high of 130.65, the EUR/JPY has declined by around 240 pips (-1.84%) to print a low of 128.25 on 24 March 2021, it has started to inch higher in the past two days by around 120 pips to recover almost half its initial losses.
- Interestingly, the aforementioned bounce has taken shape right above the 128.25 key support level that confluences with several different technical elements; the lower boundary of the major ascending channel in place since 6 May 2020 swing low, the 50-day Exponetial Moving Average and a cluster of Fibonacci retracement levels.
- In addition, short-term upside momentum of price action seems to have resurfaced as the 4-hour RSI osicllator has reversed up from its oversold region and just staged a bullish breakout from a significant corresponding descending resistance at the 50 level.
- Hence as long as the 128.25 key short-term pivotal support holds, the EUR/JPY may see the start of another potential impulsive up move sequence to target the intermediate resistances at 129.90 and 130.65 in the first step. On the other hand, a 4-hour close below 128.25 invalidates the bullish scenario for a deeper corrective decline towards the next support zone at 127.20/127.00 (former range top from 29 December 2020 to 11 Februrary 2021 & the former major descending resistance from July 2008 swing high now turns into a pull-back support).