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  • EUR/JPY’s hourly chart shows a bullish indicator divergence.
  • Indicators on the 4-hour chart show oversold conditions. 

EUR/JPY is currently trading near 114.68, representing a 0.18% gain on the day, having hit a low of 114.40 early Thursday. That was the lowest level since November 2016. 

The bounce has confirmed a bullish divergence of the relative strength index on the hourly chart. A bullish divergence occurs when the indicator prints a higher low, contradicting a lower low on price. It is widely considered a sign of bearish exhaustion. 

Meanwhile, the 4-hour chart RSI is reporting oversold conditions with a below-30 print, and the MACD histogram is printing higher lows below the zero line, a sign of weakening of downward momentum. 

The pair, therefore, could challenge the descending 50-hour average located at 115.27. A rejection there would reinforce the bearish bias put forward by the daily chart and open the doors for a drop to fresh multi-year lows. 

Hourly chart

Trend: Oversold bounce

Technical levels