- EUR/JPY breaks below strong support at 200-DMA at 131.23, bias lower.
- The pair has slipped below 131 handle to hit session lows at 130.89 (lowest since Sept 15 2017).
- Technical indicators are bearish. RSI and Stochs are biased lower. We see -ve DMI dominance.
- Momentum studies are heavily bearish, but Stochs are in oversold levels so caution advised.
- Violation at 200-DMA raises scope for further weakness. Scope now for test of 38.2% Fib at 128.85.
- On the flipside, retrace and close above 200-DMA could see some consolidation. Breakout at 20-DMA invalidates bearish bias.
Support levels - 130.60 (Sept 15 low), 129.37 (Sept 6 low), 128.85 (38.2% Fib retrace of 114.85 to 137.506 rally)
Resistance levels - 131.23 (200-DMA), 131.35 (5-DMA), 132.15 (23.6% Fib), 133.16 (20-DMA)
Recommendation: Good to go short on rallies around 131, SL: 132.15, TP: 130.60/ 130/ 129.40/ 128.85.
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