2/23/2010 - EUR/JPY - Price action on EUR/JPY, a daily chart of which is shown, has been entrenched in a relatively strong downtrend since the mid-January highs. In the process of this downtrend, several key support levels have been broken down, including key levels around the 127.00 and 125.00 price regions. After breaking swiftly and strongly below the 125.00 area in early February, price action toyed with the 122.00 support/resistance region before consolidating in a bullish retracement that has taken the form of a short-term, flag-like parallel uptrend channel. Currently on the verge of breaking down below this retracement pattern and potentially continuing the entrenched downtrend, this currency pair is eyeing a bearish breakdown below 122.00 once again. Any significant breakdown of this level should confirm a downtrend continuation, with an initial downside price target potentially around the 119.50 price region.
James Chen, CMTChief Technical StrategistFX Solutions
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