- EUR/JPY is extending downside after failure at weekly 200-SMA, bias lower.
- The pair has closed in the red for 2 successive weeks and has opened the week lower.
- 50-DMA support at 128.32 has been breached, the pair is currently trading at 127.94, just below the 128 handle.
- Yen is likely to hold its safe haven appeal as geopolitical concern regarding North Korea resurface.
- Technicals on weekly charts are turning bearish. Stochs are showing a rollover from overbought levels.
- RSI is biased lower and MACD is on verge of bearish crossover on signal line.
- Bearish divergence from price action on Stochs and RSI on daily charts supports downside.
- Retrace into channel top at 127.40 will raise scope for test of channel base. Upside seen only on decisive break above weekly 200-SMA.
Support levels - 127.40 (channel top), 127, 124.60 (trendline)
Resistance levels - 128.32 (50-DMA), 128.83 (5-DMA), 129, 129.71 (20-DMA)
Recommendation: Good to go short on rallies around 128.10/128.20, SL: 128.85, TP: 127.60/ 127.40/ 127.
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