• The break of the neutral triangle will result in an expansion of volume and tick size.
• A bearish range shift by the RSI (14) is indicating more downside ahead.
• The violation of horizontal support placed from 136.56 has triggered the downside bias for a shorter period.

The EUR/JPY pair has displayed a less-confident pullback after printing a fresh three-day low of 136.40 on Monday. The cross has recovered minutely to near 136.76, however, the downside remains favored as the asset has violated the horizontal support placed from Thursday’s low at 136.56.

On an hourly scale, the asset is auctioning in a symmetrical triangle that signals for slippage in the volatility followed by an expansion in the same. An expansion in volatility results in wider ticks and heavy volume. The upward sloping trendline of the above-mentioned chart pattern is placed from the August 2 low at 133.40 while the downward sloping trendline is plotted from the August 10 high at 138.40.

The 20-and 50-period Exponential Moving Averages (EMAs) at 136.68 and 137.10 respectively are expected to overlap with each other, which will result in consolidation ahead.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more downside ahead. 

Should the asset oversteps the round-level resistance of 138.00, the shared currency bulls will drive the asset towards July 29 high at 139.51. A breach of the July 29 high will send the cross towards July 18 high at 140.80.

On the flip side, the yen bulls could gain control if the asset drops below the August 4 low at 135.64. An occurrence of the same will drag the cross towards the previous week’s low at 134.90, followed by an August 2 low at 133.40.

EUR/JPY hourly chart