The daily EUR/JPY chart shows a market that has completed an ABC correction with C=A wave equality. It is also just above 50% retracement of the decline from 111.60 to 97.02. The RSi has broken above 60, showing loss of bearish momentum. As the market trades higher, the EUR/JPY is nearing key resistnace levels. A declining trendline (going back to April 2011) lies just above. There is a pivot near 105.67, above which, 106.03 is 61.8% retracement.
While the EUR continues to be pressured fundamentally, the JPY also has fundamental changes this week that weakens it in the form of an expanded Asset Purchase Program (QE). A bearish outlook from the upcoming resistance zone should be limited to 102.50 pivot and no lower than 102. With no clear fundamental edge, and market losing bearish bias, EUR/JPY is likely entering into a sideways choppy market.
The GBP/JPY is one step ahead of the EUR/JPY in that is has extended past the C=A projection, pushed the RSI above 70 in the daily chart, broke above the 200 day SMA, and instead of flirting with 50% retracement, it has almost returned to the top of the previous downswing (which did not make a new low as EUR/JPY’s had). The upcoming pivot is at 126.50-126.70 area. A push above 128.00 can open up the next resistance pivot at 130.86.
Otherwise, the market would be establishing a sideways range between roughly 116.90 and 126.60. If this is the case, the maximum bearish outlook from 126.60 should be 122.70, the central pivot of the range.
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Fan Yang CMT is the Chief Technical Strategist for IBTRADE, trader, educator and a main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.0