The EUR/JPY continues to see two-way trading action, as the pair struggles to break free from the 116.00 to 120.00 trading range.
EUR/JPY analysis shows that the pair is technically bearish and remains trapped within a descending broadening wedge pattern.
EUR/JPY medium-term price trend
The euro currency has recently been struggling to rally against the Japanese yen as safe-haven currencies are in strong demand.
Recent upside failures around the 120.00 level have caused the EUR/JPY to slip back under its 200-day moving average.
EUR/JPY technical analysis over the medium-term shows that the pair needs to break major trendline resistance on the daily time frame to encourage a meaningful upside breakout.
The trendline in question is located around the 122.80 level, and is found by attaching the June 2016 low to the January 2019 low.
EUR/JPY bulls have repeatedly struggled to break this trendline, with the series of upside failure extending back to October 2019.
With this in mind, watch out for a strong directional move if EUR/JPY pair stages a sustained breakout above this key trendline.
EUR/JPY short-term price trend
EUR/JPY technical analysis over the short term highlights that the pair has a bearish trading bias while price trades above the 118.00 level.
A descending broadening wedge pattern is in play on the four-hour time frame, with the wedge located between the 116.00 to 120.50 levels.
Broadening wedges often indicate periods of range bound trading followed by a strong and sometimes explosive breakout.
Looking at the upside potential, the EUR/JPY pair could rally towards the 125.00 level if a bullish breakout occurs. While a move to the downside could see the EUR/JPY pair failing below the 112.00 level.
EUR/JPY technical summary
EUR/JPY analysis highlights that the pair is currently bearish over the short and medium-term. A breakout from the 116.00 to 120.50 price range could prompt an explosive directional move.