Forex Technical Update

Preivous: EUR/JPY and GBP/JPY Testing and Breaking 2012 Highs (2/7)

EUR/JPY

EUR/JPY 2/17/2012 Daily chart

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.

However, if EUR gets the short-term edge and pushes through 106. We open up the next pivot near 108.50, with the 200 day SMA to monitor for resistance as well.

GBP/JPY

GBP/JPY 2/17/2012 daily Chart

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.

This analysis is of a snapshot of the market and the anticipation based on the current conditions. Things may change, and adjustments are often needed especially when preparing for a trade. To follow up and explore trading plans and risk management techniques as well as fundamental bias and event risks, don’t miss IBTrade’s daily Market Intelligence Briefings live at 8:00AM EST throughout the week. To gain free access to these sessions, register at here at IBTrade. You will receive and email with the link and password before each session once you have registered.

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

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  1. Rating 0
    Commented: February 19th, 2012
    Hi Fan Yang. Is that double bottom at GJ?

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