The Euro moved lower against the Japanese yen recently and tested the 140.0 support area. There is a possibility that the EURJPY pair might correct a bit higher from the current levels. However, the upside might be limited considering the fact that there is a monster resistance around the 140.50-60 area. There is no release in the Euro area, so we might not witness much action in the Euro pairs. We need to see whether the pair might correct higher or not and can it break the stated resistance area. The Japanese yen gained a lot against the Euro and the British pound recently, but upside might be limited moving ahead.
There is an important bearish trend line formed on the hourly chart of the EURJPY pair, which is likely to act as a catalyst in the near term. The pair has formed a minor double bottom pattern on the hourly chart, which might take the pair a bit higher. However, the highlighted trend line is a major barrier for the EURJPY pair. A close above the same might call for more gains in the pair. If it breaks higher, then a test of the 100 hour simple moving average is possible, which is sitting around the 61.8% fib retracement level of the last leg from the 141.72 high to 140.01 low.
If the EURJPY pair fails to trade higher and move lower, then a break below the last low of 140.00 level could ignite sharp losses in the pair in the near term.
Overall, one might consider buying with a break above the stated trend line as long as the pair is trading above the last low.
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Posted By Simon Ji of IKOFX
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