EUR/JPY technical analysis: Approaching the lower end of the bear flag

• EUR/JPY seems to have carved out a bear flag on the 8-hour chart.
• A break below 122.65 would confirm a bear flag breakdown.

EUR/JPY is on the defensive and could soon drop to the bear flag support of 122.65, courtesy of risk aversion and increased demand for the anti-risk Japanese Yen.

Acceptance below 122.65 would confirm a bear flag breakdown - a continuation pattern which often accelerates the preceding bearish move. So, a flag breakdown, if confirmed, could yield a sell-off to levels below 112.00.

Supporting the bearish case is the below-50 print on the 14-day relative strength index (RSI).

The outlook, however, would turn bullish if the cross rises above 123.08, validating the positive crossover the 5- and 10-day moving averages (MAs) confirmed earlier this week.

8-hour chart

Trend: Bearish below 122.65

Pivot points