EUR/JPY rests near 121.00; is in negative correction [Video]

EURJPY created a spike above the 20-day simple moving average (SMA), but the bias remains bearish in the short-term, as the price is trading well below the 13-month peak of 124.42.

Further backing this short-term view are the Ichimoku lines and the 20-day SMA, which is reversing down. However, for now the technical oscillators reflect contradicting signals. The MACD, in the positive area, remains below its trigger line but it seems to strengthen its momentum, while the RSI hovers in bullish territory and is pointing up.

If buying interest picks up above 121.20, early resistance could occur at the 23.6% Fibonacci retracement level of the up leg from 114.40 to 124.42 at 122.06. A violation of this level may shoot the pair to challenge the 124.42 barrier and the 125.20 level, registered on April 21.

Otherwise, if sellers sink deeper and send prices below the 38.2% Fibo of 120.60, the lower surface of the cloud and the 50.0% Fibo of 119.40 could provide strong support to traders. Extending lower could encounter the 40-day SMA around the 119.00 handle ahead of the 61.8% Fibo of 118.23.

Overall, the very near-term picture is negative, while a break below the 100-day SMA could suggest sharper bearish momentum.