The EURJPY currency pair on the D1 time frame was in a prolonged uptrend until the 1st of June when a higher top was recorded at 134.125. After that, bears started coming out of hiding, and as a result, EURJPY lost its uphill momentum.
A closer look at the Momentum Oscillator revealed a negative divergence between point a and b, compared to the price at 132.528 and 134.125. This could have alerted technical traders that a potential technical reversal was in the making.
The market then broke through the 15 and 34 Simple Moving Averages and the Momentum Oscillator pierced through the zero baseline.
A possible critical support level was formed when a bottom was recorded on the 14th of June at 132.648. Bulls are currently trying to drive the market higher, but bears are in the works again with a possible resistance level and lower top formed on the 10th of June at 133.758.
If the EURJPY breaks through the critical support level at 132.648, three possible price targets can be projected. Attaching the Fibonacci tool to the bottom at 132.648 and dragging it to the top of the resistance level at 133.758, the following targets may be calculated. The first target can be estimated at 131.962 (161.8%). The second price target might be forecast at 130.852 (261.8%), and the third and final target can be anticipated at 129.056 (423.6%).
If the resistance level at 133.758 is broken, the above scenario is annulled.
As long as enough bears join the EURJPY currency pair and supply overcomes demand, bears will be able to gain more power.
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