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EUR/JPY dropped in the short term, but it continues to stay in the buyer's territory. The price action has printed a potential Double Top reversal pattern. The formation is far from being confirmed, so the bias is still bullish.
The pair could develop an important downside movement if JP225 (Nikkei) goes down after its amazing rally. The Japanese stock index has shown some overbought signs, so a potential drop is favored. Today, the Euro-zone and the Japanese economic data have come in mixed.
The Economy Watchers Sentiment dropped from 48.4 to 34.7 points far below 45.9 expected, the Final GDP increased by 0.5% beating the 0.3% estimate, while the Final GDP Price Index registered a 1.1% drop versus only a 0.7% fall expected. In addition, the Current Account was reported lower at 1.41T below 1.85T and under 1.78T forecast.
EUR/JPY failed to approach and reach the weekly R1 (130.85) level signaling an overbought situation. It has found support on the ascending pitchfork's median line (ML). Staying above the median line (ML) indicates that the pair could still increase.
Making a valid breakdown through the median line (ML) and below 130.17 weekly pivot point could activate a sell-off.
Dropping and stabilizing below the weekly pivot point and under 130.17 today's low could announce a potential drop towards the S1 (129.60).
An upwards movement could be activated by a valid breakout above the R1 (130.85).
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