EUR/JPY extends the upside movement as the Yen is pressured by the Nikkei’s failure to stabilize above the 20058 major static resistance. The JP225 continues to move in range right below the 20058 obstacle, technically, could drop on the short term, but remains to see if this will be a distribution or an accumulation movement.

I hope we’ll have a clear direction on Nikkei because the rate is narrowing and a momentum is expected, remains to see the direction, a drop will force the Yen to increase again versus all its rivals. EUR/JPY decreased a little as the Euro-zone data have come in mixed earlier, the Retail Sales rose by 0.5% in July, beating the 0.0% estimate and the 0.4% growth in the former reading period. The Final Services PMI remains steady at 55.4 points for the second month in July, matching expectations. Moreover the German Final Services PMI decreased from 53.5 to 53.1 points, even if the traders have expected the rate to remain steady at 53.5 points, French Final Services PMI increased from 55.9 to 56.0 points, exceeding the 55.9 estimate, while the Spanish Services PMI dropped from 58.3 to 57.6 points, even if the economists have expected to see an increase to 58.4 points.

EUR/JPY drops after the failure to stay above the sliding line (ascending dotted line), the Yen could take the lead if the JP225 will start a significant sell-off. I’ve drawn a Rising Wedge pattern, so a failure to close above the sliding (SL) could signal a potential drop. Is premature to say that we’ll have another leg lower, the perspective is bullish right and is expected to increase further because is located in the buyer’s territory.

Only a breakdown from the Rising Wedge and below the upper median line (UML) of the ascending pitchfork will open the door for more declines in the upcoming period. A minor drop could appear also because  we have a bearish divergence, you can see that MACD indicator is losing altitude.