Fails to break out and declines to key make-or-break trendline

• EUR/JPY has failed to break out above the top of its range high and has pulled back down to support. 
• If the pair continues lower and breaks below a key trendline it will probably signal a new down leg within the range.  

EUR/JPY declines after multiple failed attempts to break out of the top of its range high. 

The down move has stalled at the level of the trendline for the move up from the mid-September lows. Another break below the trendline and the previous day’s lows would confirm a new move lower within the pair’s multi-month range. 

EUR/JPY 4-hour Chart 

Given the pair’s long-standing adherence to the confines of the range it will probably next start moving lower as it continues to respect its guardrails. 

EUR/JPY has broken below 161.91 (October 8 low) helping to confirm the start of a bearish leg. A break below the 161.85 low of Thursday, would provide stronger confirmation. Such a break could eventually reach the next downside target at the range floor of about 158.32 – the October 1 as well as September 30 lows.

The Relative Strength Index (RSI) has fallen below the 50 mid level which suggests fairly strong downside momentum accompanied the most recent sell off. This is a sign of mild underlying weakness in the pair.

Alternatively, it is also still possible that EUR/JPY might break out above its range. Such a break would need to be decisive to inspire confidence. A decisive move would be one characterized by a longer-than-average green candlestick which cleared the range high and closed near its high, or three green candles in a row breaking above the top of the range.