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EUR/JPY in a Bullish Continuation Breakout

EUR/JPY has been bullish in September, rallying from a low around 136.80 to 141.21 before falling in a channel/wedge pattern. During this decline to 138.38, price has broken below the 50-period simple moving average (SMA), and the RSI dipped below 40. Basically EUR/JPY loss some bullish bias and momentum.

(EUR/JPY 4H chart 9/30)

Still, the pair is now trying to open up a bullish continuation signal as it broke above the falling trendline from 141.21, and is trying to hold above the 100-period SMA. If price then breaks above 139.50, it would clear all the SMAs, and provide a strong bullish continuation signal that has 140.20 and 141.21 highs in sight in the short-term. A break below 138.00 however could spell trouble for the bullish outlook.

Now, if price indeed shifts back into a bullish mode in the 4H chart, it also has bullish continuation implication in the daily chart. Apparently, the September rally was itself a bullish continuation signal as it broke above a falling trendline and above the cluster of 200-, 100-, and 50-day SMAs.

The current bearish pullback is testing the resolve of bulls from this breakout. If price can hold above 138 and move above 140.00, we should be looking at a bullish continuation, and if the 141.21 high is broken, the next areas of interest could be:
1) 142
2) 143.47
3) 145.69 (high on the year).

A break below 137.50 would invalidate the breakout and keep EUR/JPY in a consolidation, with some bearish bias to test the lows just under 136.00.

(EUR/JPY Daily Chart 9/30)