EUR/JPY Price Analysis: Bulls now await a sustained move beyond 126.00 mark

• EUR/JPY gained strong traction on Tuesday and surpassed intermediate resistance levels.
• Extremely overbought RSI on the 1-hourly chart warrants some caution for bullish traders.
• Any meaningful dip might now be seen as a buying opportunity near the 125.65-60 region.

The EUR/JPY cross continued scaling higher through the mid-European session and spiked to near one-week tops in the last hour. Bulls now await a sustained move beyond the 126.00 round figure mark amid a modest pickup in the shared currency and receding safe-haven demand for the Japanese yen.

Sustained breakthrough a one-month-old descending trend-line and 100-hour SMA was seen as a key trigger for bullish traders. A subsequent strength beyond 200-hour SMA, nearing the 50% Fibonacci level of the 126.76-124.44 downfall, might have already set the stage for additional gains.

The constructive set-up is further supported by the fact that oscillators on 4-hourly/daily charts have just started moving into the positive territory. However, RSI (14) on the 1-hourly chart is already flashing extremely overbought conditions and warrant some caution for bullish traders.

Hence, it will be prudent to wait for some strong follow-through buying beyond the 126.00 mark before positioning for any further appreciating move. The cross might then accelerate the momentum further towards the near major hurdle near the 126.40-45 horizontal zone.

On the flip side, any pullback might now be seen as a buying opportunity near 200-hour SMA/50% Fibo. confluence resistance breakpoint, around the 125.65-60 region. This, in turn, should help limit the downside near the 38.2% Fibo. level, around the 125.35-30 zone.

EUR/JPY 1-hourly chart

Technical levels to watch