EURJPY has been moving sideways over the last three weeks with upper boundary the 125.05 resistance and lower boundary the 123.40 support. Currently, the mid-level of the range is the 38.2% Fibonacci retracement level of the downleg from 133.10 to 118.57, around 124.10, where the price has been trading above it since January 17.
According to the technical indicators, in the 4-hour chart, the RSI and the MACD are flattening above the neutral threshold of 50 and the zero line respectively, however, the stochastic oscillator is strengthening its momentum higher in the overbought zone. It is worth mentioning, that the Bollinger bands are squeezing the price action, suggesting a possible strong break outside of the range in either direction.
If the market pushes the pair higher above the upper boundary, prices could challenge the 125.55 resistance level, taken from the low on August 17. More advances would likely open the way for the immediate resistance of the 50.0% Fibonacci of 125.85 before traders’ attention turns on the 127.10 hurdle, identified by the peak on December 27.
On the flipside, if the market manages to turn to the downside again and slips back below the 38.2% Fibonacci and the 123.40 support, this could send prices until the 122.80 support level before touching the 23.6% Fibonacci of 122.00, shifting the bias back to a more bearish one.
Concluding, EURJPY has been trading in a narrow range in the very short term, however, in the longer timeframe the price remains in a strong bearish structure following the pullback on 133.10.