EUR/JPY has been unable to sustain its move to a new cycle high and the subsequent sharp setback has seen a bearish “reversal day” established to leave the spotlight firmly on the recent low and 13-day exponential average at 129.50/40. Below the latter, the pair would mark a near-term top to warn of a fall to 128.54, per Credit Suisse.
“With a bearish RSI momentum divergence and top in place the risk for a break below the recent low and 13-day exponential average at 129.50/40 is now seen as high to open the door to a corrective phase lower. We would then see support at 128.78/74 initially, then the 38.2% retracement of the rally from January at 128.54. Whilst we would look for this to hold at first, below in due course can see the ‘measured top objective’ and medium-term uptrend at 128.33/30.”
“Resistance is seen at 130.00 initially, then 130.30, above which is needed to ease the immediate upside bias for a retest of the ‘reversal day’ high at 130.68/71.”