- EUR/JPY is extending declines for 2nd consecutive week after upside was capped at 61.8% Fibo.
- The pair now finds strong support in 132.23/30 level (nearly converged 20-DMA and weekly 5-SMA).
- We see further weakness on break below. Scope then for test of 200W SMA at 130.39 levels.
- Technical indicators on weekly charts are showing slight weakness. RSI has rolled over from overbought levels.
- We see bearish divergence on RSI and Stochs on daily charts which adds downside bias.
- Breach of 20-DMA support finds next major support at 50-DMA at 130.84 and then 200W SMA at 130.39.
- We see bearish invalidation only on break above 61.8% Fib retracement of 149.787 to 109.205 fall at 134.28.
Support levels - 132.29 (20-DMA), 131.75 (Sept 26 low), 130.84 (50-DMA), 130.39 (200W SMA)
Resistance levels - 132.47 (5-DMA), 133, 134.28 (61.8% Fib retracement of 149.787 to 109.205 fall)
Recommendation: Good to go short on break below 20-DMA at 132.29, SL: 133, TP: 132/ 131.75/ 131/ 130.85
FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at -22.7448 (Neutral), while Hourly JPY Spot Index was at 56.6624 (Neutral) at 0950 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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