EUR/JPY is currently in the midst of a correction within a bullish advance, with both short and medium-term trends pointing towards more upside potential if certain conditions are met. The currency pair is pulling back after surpassing the ceiling of its multi-month range and breaking above the major moving averages located just above it on the daily chart. The bullish trend is supported by the fact that the pair has managed to rise above key resistance levels, indicating a strong possibility of a continuation of the uptrend.
In order for the bullish trend to continue, EUR/JPY would need to break above the 166.69 level, which was the high on October 31. A successful break above this level would likely confirm a further move to the upside. However, there is a resistance level at 167.96, which was the swing high on July 30, that could potentially act as a barrier to further gains. The minimum target for a breakout from the range is set at 169.68, which is the 61.8% Fibonacci extrapolation of the range’s height to the upside.
Despite the strong bullish sentiment, the Relative Strength Index (RSI) indicator is not yet in the overbought zone, which is typically considered to be above 70. This suggests that there is still room for the pair to move higher before reaching a level of potential exhaustion. Overall, the technical indicators and chart patterns are suggestive of a continuation of the bullish trend for EUR/JPY, with the potential for more gains in the near future.
Traders and investors looking to capitalize on the bullish momentum in EUR/JPY should keep a close eye on key resistance levels, particularly the 166.69 level. A successful break above this resistance level could open up further opportunities for long positions. However, it is important to remain cautious and monitor the price action closely, as any unexpected developments in the market could lead to a reversal of the current trend.
In conclusion, EUR/JPY is currently in a correction phase within a bullish advance, with both short and medium-term trends favoring more upside potential. The currency pair has shown strength by breaking above key resistance levels and major moving averages on the daily chart. Traders should pay attention to key resistance levels, such as 166.69 and 167.96, as well as the minimum target of 169.68 for potential breakout opportunities. With the RSI indicator still not overbought, there is room for further gains in the near future, but caution is advised as market conditions can change rapidly.
