EUR/JPY Price Analysis: Signs of uptrend exhaustion on D1

• EUR/JPY looks south, having created an inverted hammer on Tuesday. 
• The pair risks falling to a multi-month long rising trendline support.

EUR/JPY is trading in a sideways manner near 126.25 at press time.

The pair carved out a bearish inverted hammer on Tuesday after rejection above 127.00 was followed by a negative close at 126.20. 

An inverted hammer has appeared following a notable rally from lows below 114.50 observed in May and at 18-month highs. Hence, the long upper wick attached to the candle is indicative of uptrend exhaustion. 

That, alongside the 14-day relative strength index's breach of a rising trendline, suggests scope for a pullback to 125.20 – that level is currently housing the trendline rising from May 7 and July 10 lows. 

The outlook would turn bullish if the pair finds acceptance above Tuesday's high of 127.07.

Daily chart

Trend: Pullback likely

Technical levels