Forex: EUR/JPY bulls looking for break above 107.65

FXstreet.com (San Francisco) - EURJPY continues to consolidate below the 107.65 roof set past Friday, and now looks heavy in Asia after printing a third straight day of gains overnight. Price, however, remains in operation above the 100-week EMA (first time since April 2011), and given the diverging moving averages on the daily chart, it seems EURJPY longs may be poised for another test of mentioned resistance if the upward momentum persists. On the contrary, the cross may be overextended at current levels (last at 107.15), with technical studies on the daily timeframe now hovering in overbought territory (RSI @ 67).

If the positive bias stays intact, a break of 107.65 would then target short-term resistance at 107.95 (April 20 high) before testing 50% retracement resistance at 108.65. Bearish corrective movements may encounter support at 105.70 (Dec 2 high), then 104.70 (Oct 23 high).

"I'd expect prior highs at 108.00 to attract profit takers and last Friday's launch level at 106.50 should be the main support point," comments Sean Lee, founder of FXWW. "Buying dips preferred overall but watch out for JPY long liquidation as the election date nears."