EUR/JPY Price Analysis: Focus on congestion zone
- EUR/JPY is consolidating in a narrow range on the 4-hour chart.
- The daily chart is reporting seller exhaustion below 120.00.
- A range breakout would pave the way for 121.00.
EUR/JPY is trapped in a sideways channel on the 4-hour chart.
At press time, the JPY cross is trading at 120.18 and the upper and lower ends of the channel are located at 120.39 and 119.73, respectively.
A range breakout would imply an end of the pullback from the Jan. 16 high of 112.87 and open the doors to 121.00.
On the other hand, a range breakdown could accelerate the sell-off from 112.87 and shift risk in favor of a drop to 119.25 (Nov. 14 low).
The pair has carved out multiple long-tailed daily candles over the last few days, signaling a bear failure below 120.00. As a result, a range breakout looks likely.
However, if the pair fails to take out the descending 10-day average at 120.44, a range breakdown and a drop to 119.25 could be seen.