Almost at the top of a nine-week span

• EUR/JPY pulls back just before reaching near the top of a medium-term range.
• It may yet reach the range ceiling or reverse as the sideways trend extends.

EUR/JPY nearly tops its nine-week range before stalling and staging a shallow pullback into the mid-162s.

EUR/JPY 4-hour chart

Given the shallow nature of the pullback, there is a chance that EUR/JPY will resume its upward movement and eventually reach the top of the nine-week range at 163.80.

However, the momentum indicator of the Moving Average Convergence Divergence (MACD) crosses below the signal line, giving a sell signal and this could lead to a lower reversal.

The pair is most likely in a short-term sideways trend, which, given the guiding principle of technical analysis that “the trend is your friend”, would suggest an extension of the sideways mode. If so, then the next move for EUR/JPY is likely to be a return to the base of the range in 154s.

It is too early to say with confidence if this will happen, however, as there are no signs of a reversal from the price itself, only the MACD. EUR/JPY is likely to make one last rally higher before turning around and beginning a new downtrend in earnest. A break below 161.00 would provide further bearish confirmation of the start of such a move.