EUR/JPY is currently at a crucial point where it is threatening to reverse its medium-term uptrend and potentially start a new downtrend. This is significant for traders as the trend is a major factor in determining the direction of a currency pair. With further downside expected, the pair could potentially fall to the 50-day Simple Moving Average (SMA) at 162.17.
On the daily chart, a break below the 163.21 level, which is the November 8 low, would likely confirm a bearish reversal of the trend. This would signal a shift in momentum towards the downside and could lead to a continued decline in the pair. The Relative Strength Index (RSI) momentum indicator is currently hovering around the 49 mark, indicating a potential for further downside movement.
If the bearish trend reversal is confirmed, the next target for EUR/JPY would be the 50-day SMA at 162.17. This level could act as a key support area and potentially halt the downward movement temporarily. However, if this level is breached, the pair could see a further decline towards lower support levels.
Traders should keep a close eye on the price action of EUR/JPY in the coming days to see if the bearish trend reversal is confirmed. A break below the 163.21 level would be a signal to enter short positions, with the 50-day SMA at 162.17 as a potential target for profit-taking. The RSI indicator can also provide valuable insight into the momentum of the pair and help traders identify potential entry and exit points.
Overall, EUR/JPY is currently at a critical juncture where a bearish trend reversal could be on the horizon. Traders should exercise caution and closely monitor the price action and key support levels to determine their trading strategy. With further downside expected, the pair could see a continued decline towards the 50-day SMA as the next target.
