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EUR/JPY4H Chart 10/28/2012 8:20PM EDT

Consolidation: Let’s start with the 4H EUR/JPY chart. This chart shows a market that rallied until it hit 104.50, as it tested a declining trendline that goes back to 2011. It has consolidated last week completing an ABC correction so far. The latest wave down was held at the Friday close (10/26)  mostly above a previous resistance pivot near 102.80. The RSI is around 40, and it should hold above 40 if bullish momentum is to persist.

More space before next support: Even under 102.80, there is more room almost down to 102.00 before we test a major support factor in the rising trendline seen more clearly in the daily chart. This is coincident with the 200SMA in the 4H chart. Clearing below 102.00 is probably a sign that the market still has a bearish outlook in the short to medium term.

Trendline: The daily chart shows the trendline support that goes back to the 94.10 low in  July. To the top side, there is a trendline that connects the 2011 high of 123.30 with the 2012 high of 111.43. Clearing above 104.50 is probably needed to be a sign for a bullish breakout. This first opens up the 108.00 pivot in the short-term

EUR/JPY Daily Chart  10/28/2012 8:20PM EDT

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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