EUR/JPY 4H Chart 11/27/2012 9:25AM EST
Breakout swing: The EUR/JPY has recently made some key bullish developments, including breaking above a major falling trendline that went back to the 2011 high of 123.30. Before we target this level, the 2012 high at 111.43 is the target. (108.00 pivot is a shorter term target/resistance pivot as well). However, before all these bullish aspirations, the EUR/JPY appears to be exhausting in the short-term and may be due for some consolidation/correction.
Retracement target: Looking at the 4H chart, we see the market topping after a bearish divergence. This could result in the first consolidation of any significance since the rally from Nov-low of 100.32. If the EUR/JPY falls below some near-term support and below the 106.00 handle, it is likely topping for some correction. The 38.2% retracement is at 104.52, which is near a previous resistance pivot, that can be monitored as support. More aggressive retracement targets include the 50% at 103.72, and 61.8% at 102.92.
Breakout continuation: If the market does retrace 50-61.8% of the breakout swing, it might actually present a good area to go long under the breakout-pullback trading strategy. But will the market offer a retracement this deep?
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.