Forex Technical Update
The EUR/JPY found no support at the 100.00 level and fell this week from a high of 100.30 to 98.46. This decline seen in the chart brought the RSI from 80 to below 30, a re-establishing bearish momentum after the brief corrective rally earlier in the week. Although the market is bearish, it is now taking a break ahead of the US Non-Farm Payroll data set for release at 8:30AM EST. The correction is flat so far. If the reaction to the release does not push the market below 98.50-98.46 support, we can be building a bottom at least in the short-term.
A 50% retracement of the first downswing this year targets 99.38, near wave (4), a conventional projection of a correction after a 5-wave move with impulse structure. Based on Elliott wave terminology, this structure shows no overlap of wave (4) and (1) and usually is longest during wave (3). This correction is contained in the short-term unless we see strength to push it above 99.60 (61.8% retracement), and the 1H RSI reading pop up above 60, and tag 70.
Then some high short-term targets are 1) 100.30 pivot, 2) 100.75-101 area. The daily chart shows a declining wedge and a market in a throw-over, or rather throw-under. The 5-wave structure so far is valid unless the market falls lower below 97.60, because then wave 3 would be the shortest. The throw-under can be seen as an exhaustion if the market can push back above 101.00 breaking wedge resistance. 102.50 is the first important pivot above 101.00. Then, a 50% retracement of the wedge would bring the market toward the 105.00 area.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.