EUR/JPY traded lower on Wednesday, breaking below the round figure of 120.00, which currently coincides with the 200-EMA on the 4-hour chart. Since October 31st, the rate has been trading below a downside resistance line and thus, we see decent chances for the latest slide to continue for a while more.
If the bears are strong enough to stay in the driver’s seat, we could soon see them aiming for the low of November 14th, at around 119.25. They could decide to take a small break after hitting that zone, thereby allowing a small rebound to occur. That said, if they decide to recharge from below 120.00, then we may see them challenging the 119.25 level again and perhaps bypassing it. Such a dip may extend the decline towards the low of October 11th, at around 118.75.
The RSI slid below 50 and continues to point lower, while the MACD, although slightly positive, lies below its trigger line and appears ready to drop below zero soon. Both indicators suggest that the rate has started gathering downside speed and corroborate our view for some further near-term declines.
On the upside, a break above 120.65 is the move that would make us start considering the bullish case. Such a move would also confirm the break above the aforementioned downside line and could initially target the 121.10 hurdle, near the high of November 7th. Another break, above 121.10, may allow buyers to put the 121.46 territory on their radars. That zone acted as a decent resistance on October 21st and 31st.
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