The Japanese yen has recently started to strengthen as risk-off trading sentiment returns because of fears about the coronavirus.
EUR/JPY technical analysis highlights that buyers must keep the pair above major medium-term technical support, around the 120.80 level.
EUR/JPY medium-term price trend
EUR/JPY analysis shows that the pair is only bullish over the medium term shows while price trades above the 120.80 level.
The daily time frame shows that the EUR/JPY is approaching an important technical region, following the recent reversal from the 122.90 level.
The EUR/JPY pairs 200-day moving average and key trend line support are both converging around the 120.80 level.
If bulls can defend this area the EUR/JPY pair could move back towards the 123.00 level, and possibly even higher over the medium term.
Some caution is advised as a rising wedge pattern is present across the daily time frame, which is a reliable bearish reversal pattern.
With this in mind, watch out for fireworks around the 120.80 level.
EUR/JPY short-term price trend
EUR/JPY analysis over the short term shows that bulls are only in control while price trades above the 121.50 level.
Bearish pressure is starting to build over the short term, although an inverted head-and-shoulders pattern is currently present across the lower time frames.
The bullish reversal pattern is near completion, and is currently in the process of forming a final right-hand shoulder.
The overall upside projection of the bullish pattern suggests that the EUR/JPY pair could rally towards the 125.00 level.
Neckline resistance from the bullish pattern currently sits around the 122.60 level, and remains the key trigger level to watch over the coming days.
Short-term traders should closely watch the trading action between the 121.50 and 122.60 levels if a recovery from current levels takes hold.
EUR/JPY technical summary
EUR/JPY analysis highlights that a bullish reversal pattern could send the pair towards the 125.00 resistance level. Traders should closely watch the 121.50 to 122.60 price range.