The 50% Fibonacci of the 134.11 – 127.92 downleg at 131.00 and the tentative dashed descending trendline at 131.32 could be the first obstacle to halt a potential upside correction. Should the rally get more legs above this wall, the focus will turn to the 132.15 – 132.75 area formed by the 61.8% and 78.6% Fibonacci levels.
Alternatively, a downside reversal below the 130.00 level could bring sellers back into play, with the price likely sinking to meet the 23.6% Fibonacci of 129.39. The presence of the 20- and 200-day SMAs in the region is flagging that any violation at this point could develop into a sharper decline. If true, the sell-off could ramp up towards the 128.30 – 127.92 zone. Beneath that, the pair could create a new lower low at 127.30.
In brief, EURJPY has probably another bullish card up its sleeve before the next bearish round takes place. A close above 130.49 could confirm an extension up to 131.00 -131.32.
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