The EUR/JPY rallied and resumed the yesterday’s bullish candle. Price is trapped within an ascending channel, so the perspective remains bullish. The Yen is going higher as the Nikkei stock index has rallied aggressively.  Technically, the EUR/JPY should climb much higher in the upcoming days as the Yen has started a corrective phase versus all its rivals.

EUR/JPY is trading somehow sideways on the short term, is consolidating the last month’s gains. Price is trying to recapture more directional energy before will climb much higher. Personally, I was wondering if this will be a distribution or an accumulation movement, but the Nikkei’s rally has signaled that the pair will climb much higher.

The French Final Private Payrolls rose only by 0.4% in the second quarter, less versus the 0.5% estimate, while the Italian quarterly Unemployment Rate will be released later and is forecasted to decrease from 11.6% to 11.3%.

I’ve added the Nikkei’s chart to show you why the Yen should drop further versus all its rivals. Has rallied after the retest the up sloping red line. Now is pressuring the confluence area formed at the intersection between the upper median line (uml) with the warning line (WL1) of the major ascending pitchfork. A valid breakout will accelerate the current rally. Only a false breakout will send the rate down again. JP225 has managed to jump above the 19700 horizontal resistance, a valid breakout will send the rate towards the 20058 resistance.

You can see that the price is trading within the inside sliding line (SL) and the outside sliding line (SL). Should approach and reach the outside sliding line (SL) after the false breakdown below the upper median line (UML) and after the failure to reach the inside sliding line (SL).

Is moving sideways on the short term, only a valid breakout above the outside sliding line will validate an increase towards the next upside targets (50% Fibonacci line and the WL1).

However, a failure to reach and retest the outside sliding parallel line will signal a broader decrease because the rate will be too overbought to stay higher.