EUR/JPY May Start Falling

After a 5-month rally without a significant correction, during which EUR/JPY moved to the upside with over  1670 pips, the pair reached a strong resistance on the monthly time frame in the zone around около 131.30 – 131.40.

The monthly bar closed as an inverted hammer with a small upper shadow and above is the resistance marked by the Bollinger Bands indicator.

The three bars on the D1 time frame in the resistance zone are also an unambiguous signal that there will be a correction.

That signal is confirmed by the divergence between two highs of the RSI indicator.

I think that there will be a possible drop to 129.50 and the next support to the downside is around  127.50 – 127.00. 

The possibility for a rally and the formation of a new high at 132.00 cannot be excluded, but should that happen we have to watch out for a deepening pf the RSI divergence, as well as for new bars on the D1 time frame that will confirmed the possibility for a deeper correction.