Forex Technical Update

Previous: EUR/JPY Challenges Declining Trendline from April (8/6)

EUR/JPY 1H Chart 8/8/2012 8:30AM EDT

EUR/JPY 8/8/2012 1H chart

The EUR/JPY was attempting to push above a declining trendline from April and then traded sideways this week as seen in the 1H chart. The 0.97.80 resistance held and the market is now pushing below the 96.95-97.00 support area. A break below completes a double top pattern. and opens up a bearish scenario at least in the near-term.

Note that the RSI has fallen below 40, so the momentum is no longer bullish. A pattern breakout projection, using the width of the double top, targets roughly 95.60. Note in the 4H chart that this also will be testing a rising trendline near 95.50. Have we completed an (a)(b)(c) correction? Is the market ready for a bearish continuation?

We may, and confirmation would be added if the market pushes the RSI reading in the 4H chart below 40, and price below 95.00, which first opens up 94.00-94.10 in the near-term.

EUR/JPY 4H Chart 8/6/2012 18:30AM EDT

EUR/JPY 8/8/2012 4H chart

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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