Forex Technical Update
EUR/JPY 4H Chart 9/5/2012 11:50PM EDT
Consolidation Range: The EUR/JPY has been range bound since finding resistance at 99.18 on 8/21. The 4H chart shows price held below 99.18 and above the 97.81 pivot since 8/16. The 4H RSI reading has also been stuck between 40 and 60, reflecting a consolidation momentum.
The ECB policy meeting on Thursday has a good chance of providing fuel for this consolidation range breakout. The market is not expecting any rate cut, but will be more focused on Draghi's press conference where he will be expected to discuss highly anticipated details of the central banks plans in the bond market.
Bullish Breakout Targets: The daily chart shows that a break above 99.18, exposes the 101.35-101.65 resistance area, which is also near the 200-day simple moving average. Also note that the RSI is likely to push above 60 and reflect a loss of bearish momentum established in the decline since the 111.43 high on 3/21. Before the 101.35-101.65 area, the 100.00 psychological handle might test the resolve of the bullish breakout.
Bearish Breakout Outlook: The daily chart also shows that a break below the 97.80 support area will also break below a rising trendline. This scenario will make the rally since late July look like a flag pattern. This means a break below 97.80 opens up the bearish continuation scenario, exposing the 94.10 support pivot/2012-low.
EUR/JPY Daily Chart 9/6/2012 12:02AM 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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