EUR/JPY continues its pullback to the trendline (dashed line on chart) for the September-October rally. 

The pair is in a short and medium-term uptrend which given the technical analysis maxim that “the trend is your friend” is favored to continue higher. 

EUR/JPY Daily Chart 

(Click on image to enlarge)

A break above 166.69 (October 31 high) would probably confirm such a continuation higher. 

Resistance at 167.96 (July 30 swing high) could provide an initial target and act as a barrier to further upside. 

The minimum target for the breakout from the range, however, lies higher, at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside (orange-shaded rectangle). 

The Moving Average Convergence Divergence (MACD) is threatening to cross below its signal line, however – a mildly bearish sign which could indicate further near-term weakness for the pair. 

There is also an open gap just below price which is only visible on the intraday charts at 164.90. Gaps have a habit of getting filled. If so, further weakness may be on the horizon, with price falling to the bottom of the open gap at 164.45. 

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