EUR/JPY 4H Chart 7/9/2012 7:05AM EDT
This also breaks below a rising trendline seen in the daily chart that held a larger degree consolidation that followed a downtrend. The 4H chart shows the RSI swinging from 30 to 70 and now back to 30. It can confirm bearish momentum development if a pullback fails to push the RSI back above 60, preferably staying under 50.
As far as price action, holding below 98.50 would be a clear sign of bearish dominance. However a pullback can go back to 99.75 and the market could still be developing a bearish impulse wave structure in the 4H chart.
A break above 99.80 can open up the bullish scenario. Otherwise, the breakout to the downside has exposed the 2012 low near 96.60, seen in the daily chart.
Another projection can be seen in the daily chart. If the decline that started at the 2012 high of 111.42 is developing a bearish impulse wave, then we can use the length of wave 1 to be the guide for the length of wave 5. This projection targets 94.75.
EUR/JPY Daily Chart 7/9/2012 7:10AM EDT
Fan Yang CMT is a trader, educator and a Chief Technical Strategist 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.