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Early in the American session, the EUR/JPY pair is trading around 147.64, a level that coincides with the 61.8% Fibonacci located at 147.80. This level will be key for the instrument. In case EUR/JPY falls below this level, it is expected to reach the bottom of the uptrend channel around 146.10.
According to the 4-hour chart, we can see that the euro is showing overbought signs. The last candles confirmed a strong retracement and this technical rebound could be seen as a signal to sell.
In case there is a pullback towards the 7/8 Murray zone located at 148.43, a double top pattern could be confirmed which could also give us an opportunity to sell with targets at 5/8 Murray located at 145.31. Finally, the price could reach the 200 EMA located at 145.13.
In case the instrument consolidates above 148.50, the expectations of a technical correction would be nullified and the EUR/JPY pair will likely continue to rise and can reach 8/8 Murray, the psychological level of 150.00
The formation of the bullish channel since the beginning of April shows that the euro has been tested the top of the bullish channel several times and without any correction. Therefore, support of around 146.00 remains to be confirmed.
In case this level is confirmed, two scenarios could occur. The first is that it will rebound and resume its bullish cycles. Alternatively, if there is a break below the bullish trend channel, a change in trend may occur. So, the price could reach the low of April 4 around 142.50.
Our trading plan for the next few hours is to sell below 147.80 or at current price levels below 61.8% Fibonacci with targets at 146.25 and 145.31 (5/8 Murray).
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