EUR/JPY consolidates gains, defends the 20-day SMA

• EUR/JPY declined to a daily low of 157.70, near the 20-day SMA and then closed at 157.96.
• Despite the correction, indicators suggest that the bulls have a slight upperhand in the short term.
• The 100 and 20-day SMAs seem to be converging to perform a bullish cross.

The EUR/JPY’s buyers seem to be taking profits on Wednesday, and the cross initially declined to a low of 157.70 and then closed at 157.86, holding above the key level of the 20-day Simple Moving Average (SMA). In line with that, indicators point towards a neutral to bullish outlook as the bulls need gather momentum as the cross contains sideways trade since the beginning of September.

The Relative Strength Index (RSI) on the daily chart printed a negative slope, still above its midline, while the Moving Average Convergence (MACD) exhibits decreasing green bars, suggesting that the bulls are struggling to gather momentum. On the four-hour chart, the RSI declined to negative territory. At the same time, the MACD is seen laying out flat red bars, which suggests that there is no evidence of strong bullish momentum in the shorter time frames and that the cross may consolidate Monday and Tuesday’s gains in the next sessions while traders await fresh fundamental catalysts to set their short-term trajectory. Back to the daily chart, the pair is above the 20,100 and 200-day Simple Moving Averages (SMA), which suggests that the bulls are in command on the broader scale.

Support levels: 157.50 (20-day SMA), 157.00, 156.50.
Resistance levels: 158.50, 159.00, 159.50. 

EUR/JPY Daily Chart