EUR/JPY Drops Sharply to the Oversold Region, May Retest Level 127.50

EUR/JPY Significant Levels
Resistance Levels: 0.7400, 0.7600, and 0.7800
Support Levels: 0.7100, 0.6900 and 0.6700

EUR/JPY Price Long-term Trend: Bearish
EUR/JPY is in a downtrend and it may retest level 127.50. The downtrend resumed after the formation of a Doji candlestick. Before the resumption of the downtrend, buyers pushed the currency pair to the previous highs. The Yen broke above the 21-day line moving average but was repelled as it approached the 50-day line moving average. Doji Candlestick was formed signaling the continuation of the downtrend. EUR/JPY has fallen and it is approaching the previous low at level 127.517. If the previous low holds, the market will rise again. The currency pair will regain bullish momentum if it breaks above the moving averages or level 130.00.

Daily Chart Indicators Reading:
EUR/JPY is at level 40 of the Relative Strength Index for period 14. The pair is in the downtrend zone and may continue to fall to the downside. The 21-day SMA and the 50-day SMA are sloping southward indicating the downtrend.

EUR/JPY Medium-term Trend: Bearish
On the 4- hour chart, EUR/JPY is in a sideways trend. Since November 30, the pair has been fluctuating between levels 127.50 and129.10. Buyers have made concerted efforts to break out of the range-bound movement. On December 16, the bulls broke the resistance at level 129.10 and rallied to 129.63 high. The pair was repelled as it reached the overbought region of the market. EUR/JPY dropped sharply and it is approaching the lower price range.

4-hour Chart Indicators Reading
The pair is below the 20% range of the daily stochastic. The
pair has fallen to the oversold region of the market. The selling pressure is likely to end and we expect the emergence of buyers in the oversold region of the market. The 21-day and 50-day SMAs are sloping downward indicating the downtrend.

General Outlook for EUR/JPY
EUR/JPY has fallen to the oversold region of the market and it may retest level 127.50. This signals the resumption of the uptrend. The currency pair may resume its range-bound move. The Yen will resume
trending if the range-bound levels are breached and the momentum is sustained.

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