EUR/JPY Price Analysis: Trapped in a sideways channel
- EUR/JPY is stuck in a sideways channel with upside capped near 122.70.
- A channel breakdown looks likely and could yield deeper losses to 121.50.
EUR/JPY's ascent from the January 8 low of 120.17 seems to have run out of steam around 122.70 over the last three days.
The repeated rejection near 122.70 has taken the shape of a sideways channel pattern on the 4-hour chart.
A convincing move through the upper end of the channel, currently at 122.70 would signal a resumption of the uptrend and could fuel a rise to 123.40 (Januar y 2019 low).
On the flip side, a break below the channel support would expose the 4-hour chart support at 121.50
A channel breakdown looks likely as the daily chart is reporting a golden crossover or a bullish crossover of the 50- and 200-day averages - a big-time lagging and contrary indicator.
Also, the probability of the pair suffering a channel breakdown will rise if the 4-hour chart RSI dives out of an ascending trendline.