Forex Technical Update
The 1H EUR/JPY chart shows a market anchoring out of a declining channel after finding support at 99.98. Considering that the market had been bullish before the channel started from 102.20, we can say the market has completed an ABC correction and is either in a bullish continuation, or in a wave X that connects more corrective patterns. If the 1H RSI reading also pops above 60, the market would lose the bearish momentum from the 2 swings down.
IF the market can hold above 100.50 in the 1/31 US trading session, the maximum target at the momentum should be 102.20, but also mind the 61.8% retracement at 101.35 as well as the pivot just above at 101.44. The 4H EUR/JPY chart has more bullish clues. The RSI reading has been able to turn from 40 and reflects maintenance of the bullish momentum. Price action bounced of the 100.00 pivot, which was also where the 200 4H SMA resided. This is a classic slingshot, bullish continuation signal.
If the market indeed pops above 101.35(61.8% retracement), and the RSI pops up above 50, we are looking at 102.20, then a resistance pivot at 102.50 established Dec.20, 2011.
Fan Yang CMT is the Chief Technical Strategist of IBTRADE and FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.