Forex Technical Update

EUR/USD 4H Chart 7/16/2012 6:57AM EDT

EUR/USD

Previous: EUR/USD Spikes up from a New Low; Breaks Channel (7/13)

The spike last Friday (7/13) is being reversed during the 7/16 European session, as a new trading week begins. The EUR/USD stayed below the 1.2250 handle and fell back below 1.22 before the 7/16 US session began. The 4H chart produces signs of bearish continuation.
1) Price action continues to make lower highs, and if it clears 1.2155, a new low will be made as well.
2) The 4H candlestick is convincing strong suggesting that bears are in charge.
3) The moving averages in the 4H chart are aligned in a bearish mode, with the 200SMA highest, moving down to 100, 55, 22, and 8 at the bottom.
4) The RSI remains below 60 after tagging 30, showing maintenance of bearish momentum.
5) There is a negative reversal signal with the RSI where price high was lower, while the RSI high was higher. A swing projection based on this signal targets 1.2090-1.21.

EUR/JPY 4H Chart 7/16/2012 7:00AM EDT

EUR/JPY

Previous: EUR/JPY - Bearish Impulse Wave Projection Targets 94.75 (7/9)

The EUR/JPY has the same signals as the EUR/USD, except that it has actually made new lows (lower than last week's). The yen DOES tend to strengthen more during risk-aversion these days than does the USD for safe haven. It also falls harder than USD during risk-on trading.

Back to the EUR/JPY, a swing projection using negative reversal signal (similar method used for EUR/USD), targets 95.60, which is also the 2012 low, established on June 1.

A more aggressive target using the width of a previous range and projecting it into the direction of the breakout is to the 94.90-95.00 area.

Then if you refer to the previous update on EUR/JPY, an Elliott Wave projection targets 94.75.

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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.