EUR/JPY Price Analysis: Eyes a minor correction before a bull flag breakout

• EUR/JPY is off the highs but remains strongly bid on BOJ’s action.
• A bull flag breakout on the daily chart remains in the offing.
• But overbought RSI conditions point to a minor pullback.

EUR/JPY is holding gains above 136.00, tracking the renewed weakness in the Japanese yen after the Bank of Japan (BOJ) conducted its unlimited bond-buying operation yet again on Thursday.

Despite the upbeat momentum, the cross is off the daily highs of 136.84, as the correction in the US Treasury yields and the risk-off market mood is keeping the upside limited, for now.

From a short-term technical perspective, EUR/JPY is primed for a massive breakout to the upside, as it charts a bull flag formation on the daily sticks.

Daily closing above the falling trendline resistance at 136.85 will confirm the bull flag, fuelling a fresh upswing to test 150.00, the pattern target. Ahead of that, Monday’s high of 137.54 will be put to test.

EUR/JPY: Daily chart

With the 14-day Relative Strength Index (RSI), however, lying in the overbought zone, a minor pullback in the EUR/JPY price cannot be ruled out before the bulls flex their muscles.

Failure to resist above the falling trendline support at 134.69 will invalidate the bullish formation, opening floors for a test of Monday’s low at 134.00.

EUR/JPY: Additional technical levels to watch