EUR/JPY continued its rally yesterday, and today, it managed to stay above 132.70, a resistance marked by the high of June 23.
The pair has remained in an uptrend since Oct. 6 and is now trading above the upside support line. Therefore, we would consider the short-term outlook to be positive.
We believe that the break above 132.70 may have opened the way towards the 133.60 territories, which provided strong resistance between June 9 and 16.
The bulls may decide to take a break after testing that zone, allowing the rate to correct lower. As long as the pair trades above the upside line, we would see decent chances for another leg north.
The forthcoming positive wave could result in a break above 133.60, a move that may open the path towards the high of June 1.
Bullish View
Shifting attention to our short-term oscillators, we see that the RSI lies well above 70 and points up, while the MACD runs above both its zero and trigger lines, pointing north as well.
Both indicators detect great upside speed and support the notion for further advances in this exchange rate.
Bearish Case
On the downside, we would like to see a slide back below 131.30 before we start examining a potential bearish reversal, as such a move may confirm the break below the pre-mentioned upside line.
The bears may push towards 130.75 or 130.50, defined by the low of Oct. 12 and the inside swing high of Sept. 29, respectively.
If neither of those two barriers can halt the slide, we could see the fall extending towards 130.00, slightly above the inside swing high of Sept. 30.