FxWirePro: EUR/JPY breaks below 20-DMA, on track to test 61.8% Fib at 127.87, stay short

EUR/JPY chart on Trading View used for analysis

• The selling pressure around the single currency picking up pace, EUR/JPY down 0.48% on the day.
   
• The pair is extending the negative stance at the beginning of the week, after rejection at 200-DMA in the previous week's trade.
   
• The Brexit negotiation continues to drive the sentiment surrounding the risk-associated assets along with Italian politics.
   
• Italy budget deadline looms Tuesday, where the government should re-submit a revised version of the 2019 draft budget to the EU Commission.
   
• Italy-German yield spread looks set to rise in the EUR-negative manner as optimism on a deal remains low (if any at all).
   
• Technical studies on daily charts are turning bearish. Stochs are on verge of rollover from overbought levels.
   
• RSI is below 50 and biased lower and MACD is on verge of bearish crossover on signal line.
   
• Price has broken below daily cloud and 20-DMA and next major bear target lies at 61.8% Fib at 127.87.
   
• Upside remains capped at 5-DMA at 129.23. We see bearish invalidation only above 200-DMA. 

Support levels - 128, 127.87 (61.8% Fib), 127.57 (Oct 26 low), 126.44 (78.6% Fib)

Resistance levels - 128.78 (20-DMA), 129, 129.23 (5-DMA), 130.11 (200-DMA)

Call update: Our previous call (https://www.econotimes.com/FxWirePro-EUR-JPY-rejected-at-200-DMA-good-to-go-short-on-break-below-20-DMA-1456070) has hit TP1.

Recommendation: Book partial profits at lows. Hold for further weakness. 

For details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.