Chart of the day EURJPY at major support zone where a minor recovery may materialize

Short-term technical outlook on EUR/JPY (Wed, 30 May)

Key technical elements

• The recent tumble of 9% (1288 pips) from its high of 137.50 printed on 02 Feb 2018 to yesterday, 29 May low of 124.60 has reached a major support zone.
• The major support zone of 124.60/123.35 is defined by a confluence of elements. The lower boundary of a primary ascending channel from 24 Jun 2016 low, the former swing high areas of 12 Dec 2016/23 Jan 2017, the lower boundary of a medium-term descending channel from 02 Feb 2018 high and a Fibonacci cluster (the 50% Fibonacci retracement of the multi-year up move from 24 Jun 2016 low to 02 Feb 2018 high & the 1.00 Fibonacci projection from the recent decline from 02 Feb 2018 high to 19 Mar 2018 low projected from 23 Apr 2018 high) (see weekly & hourly charts).
•  The hourly RSI oscillator has traced out a bullish divergence signal and remains positive above is corresponding support at the 40% level. These observations suggest that the recent downside momentum of price action has abated.
• The significant short-term resistances stand at 127.20 (former minor swing low area of 25 May 2018 & 38.2% Fibonacci retracement of the decline from 02 Feb high to 29 May 2018 low) follow by 128.50 (minor swing high areas of 25/28 May 2018 & close to 61.8% Fibonacci retracement of the decline from 02 Feb high to 29 May 2018 low.

Key Levels (1 to 3 days)

Intermediate support: 125.50

Pivot (key support): 124.60

Resistances: 127.20 & 128.50

Next support: 123.35 (lower limit of the major support zone)

Conclusion

Therefore, the EUR/JPY may see a short-term recovery to target the short-term resistance at 127.20 if the 124.60 support is able to hold for today.

Failure to hold at 124.60 sees a further extension of the down move towards the lower limit of the major support zone at 123.35.

Charts are from eSignal