EUR/JPY Daily Chart 11/15/2012 1:55PM EST
Bullish continuation? Since forming the double bottom noted in the last 2 updates, the EUR/JPY has rallied sharply over the 11/14 and 11/15 session so far. This week, the pair came up from a low of about 100.30 almost to the 104.00 handle, which is close to the October high of 104.56. The daily chart shows the RSI hold above 40, which is a sign that the bullish momentum is maintained. Now if the RSI pushes above 60, it will reflect bullish continuation momentum.
Falling wedge: As we push at this 104-104.50 resistance area, it should be noted that its a very key resistance indeed. When we check the weekly chart, we can see that is is also a declining trendline that is part of a diagonal triangle, or you might call it falling wedge. We saw an earlier test of this trendline a few weeks back that respected the trendline, but here we are again, attacking it with a sharp rally.
Breakout scenario: Clearing above the 104.56 high will be a breakout signal. In the short to medium term, this bullish breakout opens up the 108.00 handle before exposing the 111.43, 2012-high. The ability to do this turns the 4 year bearish market (since July 2008), into a sideways one, if not bullish.
Can the market push EUR/JPY above 104.56? The 200-day SMA sits just above 102.00. If there is a throwback below this handle, the bullish outlook will have to be shelved.
EUR/JPY Weekly Chart 11/15/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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