The EUR/JPY pair is experiencing a temporary correction within a broader uptrend. After a significant breakout above a prolonged range and a cluster of key moving averages, the pair has seen a natural pullback. However, the prevailing bullish sentiment suggests further upside potential in the medium term.
Analyzing the daily chart of the EUR/JPY, we observe a strong upward movement, particularly towards the end of October, when the price surged past the critical 165 level. The market reached a peak near 166 before retreating slightly. Notably, the 165 level, which previously served as resistance, has now established itself as a new support level. This shift strengthens the bullish outlook, as the price has held above this key level.
Further, the Relative Strength Index (RSI) remains at 63, having eased from the overbought territory and is now rebounding, which indicates potential for continued bullish action. With this momentum, we may see further upward movement in the coming week, possibly targeting 167.
Additionally, the market currently sits at the 50% Fibonacci retracement level, a common threshold for healthy pullbacks within an uptrend. Support at this level, particularly when aligned with a former resistance-turned-support, signals a likely continuation of the bullish trend. Traders often view the 50% Fibonacci retracement as psychologically significant, as it represents a balanced correction that attracts buyers without threatening a trend reversal.
With trading volume showing strength, the bullish outlook for EUR/JPY remains robust.
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