- EUR/JPY is in a downtrend but it has reached oversold levels according to the RSI.
- The pair is closing in on key support and could find its feet and pullback.
EUR/JPY extends its decline on Monday but reaches oversold levels. The pair is in a short and medium-term downtrend since the October 31 peak, and given the technical analysis dictum that “the trend is your friend” the odds favor more downside to come.
However, according to the Relative Strength Index (RSI) the pair is in the oversold zone (below 30) and this means short-holders should not add to their positions. It indicates there is a higher probability of a pullback occurring and prices recovering.
EUR/JPY Daily Chart
EUR/JPY has almost reached support at around 156.50 from the trendline formed by joining the August and September lows. There is a strong possibility the pair could stall at the line and consolidate.
A deeper sell-off, however, could take EUR/JPY down to 154.00 – 155.00, at the actual August-September lows.
(This story was corrected on December 2 at 15:07 GMT to say “EUR/JPY has almost reached support…” instead of AUD/USD as previously stated.)
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