- EUR/JPY isolated nearby big psychological number 125.00 after having registered a loss of 1% in the previous week
- Weekly candle signals overbought condition, complemented by a daily bearish crossover signal
Last week, the Euro-Yen pair traded firmly lower. The EUR/JPY exchange rate was confined in a trading range from a low of about 124.28 and a high of 126.75.
On the weekly chart, this price development is known to the technicians as a bearish inside bar.
The bearish inside bar pattern emerged following a well-established bullish trend that started since the beginning of May at 114.40. If the pattern is confirmed it can signal that the buyers are exhausted.
At the same time, the daily chart shows the pair may have carved out a temporary top following a bearish crossover of the 5 and 10 simple moving averages (SMAs).
The pair is at risk of stretching its downside price movement but has a significant support level at 124.29 – a level established on August 11. A break below this support level could encourage more selling pressure and would open the door for a retest of the 50-day SMA at 122.90 – which can act as an immediate downside barrier.
On the upside, the bulls can regain control of the pair if they succeed in conquering key intraday swing high level at 125.56.
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