EUR/JPY Technical: Bulls are in hesitant mode again as ECB looms

This is a follow-up analysis of our prior report, “EUR/JPY Technical: Bulls may have reached a key bearish reversal zone” published on 18 September 2023. Click here for a recap.

The price actions of the EUR/JPY have shaped the expected minor slide toward the highlighted support of 155.90 as mentioned in our previous report. The cross pair printed an intraday low of 154.42 on 3 October 2023 before it reverted to a choppy up move to retest the 159.80 major resistance (31 August 2023 swing high & February/May 2008 congestion area) in the past three weeks.

The bears seem to be lurking around the corner

Fig 1: EUR/JPY medium-term trend as of 26 Oct 2023 (Source: TradingView, click to enlarge chart)

Fig 2: EUR/JPY minor short-term trend as of 26 Oct 2023 (Source: TradingView, click to enlarge chart)

Right now, the current key technical elements are showing potential signs of a bearish momentum resurgence at least in the short-term as ECB monetary policy decision looms.

Firstly, the daily RSI momentum indicator has staged a negative reaction from a parallel resistance at the 60 level on Tuesday, 24 October which suggests a lack of bullish momentum follow-through for the recent up move from the 3 October 2023 low of 154.42 (see figure 1).

Secondly, on the shorter time frame 1-hour chart, the price actions of the EUR/JPY have just staged a bearish breakdown from the minor ascending channel support in place since the 4 October 2023 low coupled with a bearish momentum reading from the 1-hour RSI as it retreated below 50 level and has not hit an extreme oversold level yet (see figure 2).

Watch the 158.95 key short-term pivotal resistance for a potential slide towards the next intermediate support zone at 157.10/156.80 and a break below 156.80 may a revisit of 155.80 next.

On the other hand, a clearance above 158.95 invalidates the bearish move for a probe on the 159.80 major resistance again.

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