EUR/JPY Daily Chart 9/27/2012 7:30AM EDT
medium-term bullish bias and trendline: The EUR/JPY has been in 7 straight bearish sessions, 8 if the current 9/27 global session ends up closing lower than 100.07. This persistent downswing is not resting on top of a rising trendline that goes back to the 94.10 low from July. The RSI has retreated from above 70, and therefore is no longer overbought. It is around 50, showing momentum has been neutralized, though the bias in the daily time-frame is still slightly bullish just because of the push in September, unless the RSI falls below 40.
short-term bearish action: The 1H chart so far shows short-term bearish momentum for this week as the 1H RSI reading held mostly under 40 and has been able to tag 30. It is also so far holding under a declining resistance trendline. It is now at the cusp of breaking lower. If price action can fall below 99.60, and the RSI dips below 30, then we have a breakout.
If the 1H declining trendline is broken to the upside and price pushes above 100.30 with the RSI pushing above 60 decisively, then our bearish outlook would not look good. Instead we would probably be in the progress of a reversal against the past couple week’s of bearish action. In this scenario, the near-term target would be the 101.50, 200-hour SMA level, and more aggressively last Friday’s high, resistance pivot, and origin of the TL in the 1H chart, at about 102.10.
EUR/JPY 1H Chart 9/27/2012 7:38PM EDT
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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