eurjpy risk of another potential short term corrective decline within longer term uptrend 1846992017

Since our last analysis dated on 15 March 2017, the EUR/JPY had sold off as expected right below the 122.11 resistance (printed a high of 122.06 before FOMC monetary policy announcement) and declined towards the short-term downside target/support of 121.18 after the release of the less hawkish FOMC monetary policy statement. Click here for a recap on our previous report.

Now, let’s take a look at its latest technical elements

Short-term Technical outlook on EUR/JPY

(Click to enlarge charts)

Key technical elements

The recent up move from 24 February 2017 low of 118.24 has managed to stalled right at a medium-term descending resistance (depicted in pink) from 15 December 2016 high at 122.90 which is also the 76.4% Fibonacci retracement from the down move from 15 December 2016 high of 124.09 to 24 February 2017 low (see daily chart).
From a shorter-term time frame, the recent rebound (post FOMC) from 16 March 2017 low of 121.08 has stalled at the 61.8% Fibonacci retracement of the down move from the 122.90 minor swing high area of 13 March 2017 and the 121.08 low which confluences with the former minor congestion support area of 14 March 2017 (see 1 hour chart).
Based on the Elliot Wave Principal and fractal analysis, the EUR/JPY may have completed the corrective minor degree wave b rally at 122.25 and it is now likely in the midst of starting another bearish impulsive down move of a minor degree to complete wave c with potential end target at 120.54/40 zone (50% Fibonacci retracement of the recent up move from 25 February 2017 low of 118.19 to 13 March 2017 high + 1.00 projection of the length of the wave a down move projected to the potential wave b high of 122.25) (see 1 hour chart).
The hourly RSI oscillator is now showing limited potential for further upside momentum as it is coming close to its resistance and an extreme overbought level.

Key levels (1 to 3 days)

Intermediate resistance: 122.25

Pivot (key resistance): 122.90

Supports: 121.10, 120.54/40 & 120.00

Next resistances: 124.10 & 126.90

Conclusion

Therefore, as long as the 122.90 short-term pivotal resistance is not surpassed, the EUR/JPY may see a slide to retest the recent 16 March 2017 low of 121.10 and an hourly close below it is likely to reinforce the corrective decline to target the next support at 120.54/40 before potential recovery.

On the other hand, a clearance above 122.90 is likely to invalidate the preferred short-term bearish scenario to open up scope for a continuation of its medium-term uptrend from 27 February 2017 low towards the next resistances at 124.10 follow by 126.90 (upper boundary of the bullish ascending channel in place since 24 June 2016 low).

Charts are from eSignal

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