(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend line in red; horizontal support/resistance level in yellow; 200-period simple moving average in light blue.)
6/23/2008 – EUR/JPY – After breaking out above a long-term downtrend resistance line in early June, price action on the EUR/JPY daily chart, as shown, is hinting at a weakening of upward momentum. An arc is forming that is confirmed by oscillators like the displayed Stochastics, which are pointing unmistakably down from severely overbought. Another indication of a possible waning of momentum is the fact that price has hit and bounced down off the -23.6% Fibonacci target around the 168.00 region (the low-to-high retracement span being measured from the swing low on 3/20/2008 to the swing high on 4/23/2008). In the event of a continued move back down, the next major support to the downside resides around the 165.00 region, a previous support/resistance level. Further down, additional support resides at or near the long-term downtrend line in red, which originally acted as resistance before breakout.
Chief Technical Analyst
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