- EUR/JPY is approaching levels where it threatens to reverse the medium-term trend.
- Further downside could see the pair fall to the 50-day SMA.
EUR/JPY is threatening to reverse its medium-term uptrend and begin a new downtrend. This is important since according to technical analysis theory “the trend is your friend” so if the medium-term trend reverses the odds will favor more downside to come.
EUR/JPY Daily Chart
A break below the 163.21 (November 8 low) would probably confirm a bearish reversal of the trend. The next target to the downside is likely to be support from the 50-day Simple Moving Average (SMA) at 162.17.
The Relative Strength Index (RSI) momentum indicator is plateauing around the 49 mark but looks vulnerable to extending another leg lower. This further reinforces the bearish trend reversal thesis.
