After making a low on the year at 130.13, the EUR/JPY has been drifting higher, but the structure of this rally looks vulnerable. Let’s take a look at the charts.
137-137.50 will be a key resistance area which includes the 200-period SMA in the 4H chart, and a previous support/resistance area. If price can hold above 134, it has upside to this area. Now, if the euro-yen breaks above 137.50, the next key resistance will be around 140-141, which involves the cluster of 200-, 100-, and 50-day SMAs, and a falling trendline coming down from December and 2014’s high of 149.55.
Now, if 134 does not hold, let’s start monitoring the 135 level as resistance. If a pullback fails to clear 135, the pressure should remain to the downside towards the lows on the year with risk of further decline in continuation of the bearish trend in the past few months.
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