Forex Technical Update
EUR/JPY Daily Chart 9/16/2012 7:50PM EDT
Strong break: The EUR/JPY broke some key resistance factors last Friday (9/16). The pair starts this week sitting just under the 103.00 handle after breaking above 101.65 , the resistance from a consolidation period in June. The EUR/JPY's upside breakout also clears the 200-day SMA and established the strongest 1-day candle from open to close in 2012 so far.
Anticipating Correction: There are signs that the market may still have some more juice to the upside, but in the very short-term, the EUR/JPY might be slightly overbought. It should be noted that the 2nd strongest open-close 1-day rally was on 2/23, which was followed by a week of corrective decline before a capitulating push higher.
If there is a throwback, the 101.35-101.65 area might be considered support. I think there can be a pullback toward 100.65 within the bullish scenario, but below that, the bullish outlook becomes doubtful. (100.65 can be seen in the 4H chart as an intra-day resistance pivot.) However, there is not bearish signal until a break below the rising trendline seen in the daily chart, which probably requires at least clearing below the 100.00 psychological handle.
Upside targets: As the market extends higher, the first level to monitor is in the 104.60-104.85 area that includes a previous support pivot, and the 61.8% retracement of the 111.43-94.13 downswing from late March through late July. If the market clears above 105 handle, the next target could be in the 107.75-108.00 area, which include the 78.6% retracement and a previous resistance pivot.
EUR/JPY 4H Chart 9/16/2012 7:40PM 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.
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.
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