- EUR/JPY looks south, having created an inverted hammer on Tuesday.
- The pair risks falling to a multi-month long rising trendline support.
EUR/JPY is trading in a sideways manner near 126.25 at press time.
The pair carved out a bearish inverted hammer on Tuesday after rejection above 127.00 was followed by a negative close at 126.20.
An inverted hammer has appeared following a notable rally from lows below 114.50 observed in May and at 18-month highs. Hence, the long upper wick attached to the candle is indicative of uptrend exhaustion.
That, alongside the 14-day relative strength index’s breach of a rising trendline, suggests scope for a pullback to 125.20 – that level is currently housing the trendline rising from May 7 and July 10 lows.
The outlook would turn bullish if the pair finds acceptance above Tuesday’s high of 127.07.
Daily chart
Trend: Pullback likely
Technical levels
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