EURJPY: Cross Volatile, Bearish Reversal Soon?

Recent days have witnessed volatility for the EURJPY pair as it struggles to settle above the strong resistance of 131.00. Bulls managed to defend the steep bullish trend-line yesterday and the euro jumped, with another test of this line during night and this time the price jumped to new swing highs.

However, as the London session began, investors took the advantage and strong selling appeared, which brought the price back below the 131 mark, forming a doji star, or a bearish pin bar. Should this candle close around 130.80, it could be a bearish reversal, signalling further potential downside pressure.

The first important support is located at the aforementioned bullish trend line, which is around 130.60 for today. If this is not held, downward momentum could strengthen, with a possible decline toward another buying zone in the 130.00/10 zone. Another major support is located at 129.80 and, if the price breaks below, the bullish wave would be cancelled.

On the upside, the resistance is located in the 131.00 zone and the price needs to close above to confirm a breakout. Afterward, further appreciation toward today's highs at 131.40 could occur.