Is EURJPY overbought?
2023.07.04 06:26
bulls ran out of fuel after unlocking a 15-year high of 157.92 last week.
The pair remained trapped below the 158.00 ceiling for the fifth consecutive trading day, increasing speculation that the latest fast rally might have matured. The RSI and the stochastic oscillator have been moving sideways within the overbought zone since mid-June in the daily, weekly and monthly timeframes, backing this narrative too.
The market structure in the very short-term picture, however, seems to be taking the shape of an ascending triangle, which is typically a bullish continuation pattern. If the price exits the triangle on the upside, resistance could next commence within the 159.40-160.00 constraining zone last active during the 2007-2008 period. Another leg higher could pause somewhere between 162.50 and 163.00.
In the event the price slides below the 157.35 floor, where the triangle’s lower trendline intersects the broken resistance line from January 18th, selling pressures could intensify towards the 155.85 handle. Another defeat there could threaten a plunge towards the 20-day simple moving average (SMA) and the broken long-term ascending line from August 2020 at 154.45.
All in all, EURJPY could end lower on profit-taking in the short term. Yet, as long as the price trades above the 157.35 base, there is potential for a rally aiming for the 160.00 psychological mark.
