EURJPY: Cross Tests Major Support

Market sentiment worsened notably on Tuesday and JPY crosses were sold-off. The EURJPY cross declined by 0.6% during the London session and traded slightly above the 131 mark.

The price dropped to the first major support of the current upside wave, at around 131.00. Previous lows and highs joined at this point, making the horizontal level one of major importance. If bulls manage to defend this level, the outlook may still be bullish. However, if the price drops below, the trend could switch to neutral, or possibly bearish.

Another zone to be considered is about one figure lower, which is near the psychological level of 130. Should the Euro drop below this zone, the bearish trend could be confirmed.

On the upside, if the price jumps from 131.00, we could see an upside move, targeting the 132 handle, where the short-term bearish trend line merges with previous lows. A break above would reaffirm the bullish momentum and perhaps trigger the next target at current cycle highs near 133.

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