EUR/JPY has quickly reversed its recent strength, closing below its key 200-day moving average (DMA) at 129.57 as well as completing a bearish “outside day” to turn the risk lower again. Next support is seen at 129.15, analysts at Credit Suisse report.
“The sharp sell-off has seen a bearish ‘outside day’ established and more importantly has resulted in a close below the key 200-DMA, now at 129.57. This is seen to lessen the potential for a ‘head and shoulders’ base and instead warns of a more important turn lower.
“We see support next at 129.15, removal of which can further increase downside momentum to clear the way for a move back to retest the 127.93/88 August lows.”
“Resistance is seen at 129.57/58 initially, then 129.74, with the immediate risk seen staying lower whilst below 130.20/28. A break can rekindle thoughts of a potential base for a retest of the downtrend, now at 130.75.”