• EURJPY turns more bullish after rising above 50-day SMA and cloud

• But 158.60 level proving to be a more difficult obstacle

• Bigger picture remains neutral

EURJPY has gained some positive traction in recent days after clearing both the 50-day simple moving average (SMA) as well as the top of the Ichimoku cloud. However, the bulls can only claim partial victory because there is a high risk of a pullback if the pair is unable to break above the 158.60 hurdle, which is hindering a more convincing breakout above the cloud.

The momentum indicators are pointing to a continuation of the bullish bias in the near term. But whereas the fast and slow stochastics are positively aligned and rising, the RSI appears to have flatlined slightly above 50, questioning whether the current upside momentum will be strong enough to drive further gains.

Should the bulls manage to push the price above the 158.60 barrier, the next target will be the August top of 159.75, which was a 15-year high. A successful climb above the 160.00 zone would likely turn attention to the 165.00 area, which last acted as resistance all the way back in 2008. This was also when the pair came just shy of the next crucial level of 170.00.

On the other hand, if EURJPY fails to overcome the immediate resistance of 158.60, a downside reversal would probably follow, with initial support coming from the 50-day SMA at 157.90. A steeper slide would bring into scope the 100-day SMA, which is about to intersect the Kijun-sen line at 156.49, while lower down, the bottom of the cloud could halt the decline at 155.57.

In the medium term, however, the outlook remains neutral and only a sustained advance above the August peak of 159.75 would shift it to bullish. Otherwise, a drop below the cloud would not only turn the short-term picture to bearish, but it would undermine the neutral structure in the medium term as well as question the longer-term uptrend.