- EUR/JPY is falling to a key support level after plunging further on Friday.
- It could bounce once it touches the level and the RSI is oversold on an intraday basis, warning aggressive short sellers.
EUR/JPY extends its downtrend from the Halloween peak and is within striking distance of key support at the September 30 low of 158.11 (dashed red line on chart).
It is now probably in a short-term downtrend and since it is a principle of technical analysis that trends tend to extend, the odds favor EUR/JPY falling to lower lows.
EUR/JPY Daily Chart
At the September 30 low, the pair will likely find support and bounce. The Relative Strength Index (RSI) momentum indicator is in the oversold zone (below 30) on an intraday basis. If the pair closes with the RSI still oversold, it will be a signal for short position holders not to expand their short positions. The risks of a setback will also be greater.
A deeper sell-off could take EUR/JPY to the trend line around 157.00 or even 154.00 – 155.00, the August-September lows.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
