EUR/JPY Price Analysis: Establishes above 20-EMA, 137.00 a key hurdle

• EUR/JPY is oscillating between 20- and 50-EMAs, which indicates a volatility contraction.
• An establishment above the downwards-sloping trendline has strengthened the eurozone bulls.
• For further upside, the asset needs to violate the 137.05-137.31 supply area.

The EUR/JPY pair is aiming gradually higher after a bullish open test-drive move in the Asian session. The cross is continuously facing barricades around the critical resistance of 136.50. On a broader note, the asset is scaling higher after printing a low of 133.39 on Tuesday, has added 2.60% and bulls are still gearing for a fresh rally.

Confident stability above the downward sloping trendline, on a four-hour scale, plotted from July 21 high at 142.33 has strengthened the shared currency bulls. However, the supply zone placed in a 137.05-137.31 range will act as a major resistance ahead.

The 50-period Exponential Moving Average (EMA) at 136.65 is restricting the eurozone bulls from scaling higher while the 20-MA at 136.00 is providing a cushion to the asset. An oscillation of an asset in a mid of 20 and 50-EMAs signals a volatility contraction.

Also, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range, which indicates that the asset is awaiting a potential trigger for a meaningful move.

Should the asset violates the above-mentioned supply zone firmly, the eurozone bulls will drive the asset towards July 26 low at 138.13, followed by July 27 high at 139.51.

On the contrary, the yen bulls could regain strength if the asset drops below Thursday’s low at 135.66. An occurrence of the same will drag the asset towards Wednesday’s low and Tuesday’s low at 134.83 and 133.39 respectively.

EUR/JPY four-hour chart