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Is EUR/JPY Coming Out of The Reverse Gear?

December 1, 2013 in Chart Alert

How can we not talk about EUR/JPY after we just talked about GBP/JPY. After all the story of EUR/JPY is also not much different even though differences are there. Do also check the update about GBP/JPY.

During September 2008, the pair has seen a volatility of 1295 pips. Yes, September 2008 was a month which had filed itself in the the history of global economy. After all Lehman Brothers  bankruptcy had shaken down the economy for years to come. During the subsequent month EUR/JPY witnessed a volatility of 4607 pips. That kind of volatility is a record in itself. After that great fall the pair had remained in a very volatile sideways range for four months. The subsequent effort for the recovery had failed at 139.23 and then the 3 year long downtrend continued which went up to August 2012. Well, Why are we using the past tense? Has the downtrend already ended? Oops, questions are difficult but then let’s check what the charts are saying?

EUR/JPY monthly chart of past 10 years

EUR/JPY historical chart - 10 years

The first indication for the possibilities of some significant upward gains or even a reversal had come in December 2012 when the price action had broken over the channel which was containing the price inside it for three years and three months. Well, it was something major but not as major as what happened during last week. EUR/JPY very bullishly broke over 139.23. Not only this level had proved to be a strong resistance after the great fall but this also represents the psychological resistance territory of 140.00 level. Last week the pair went as high as 139.71, just shy of 140.00.

What can we expect from EUR/JPY now?

EUR/JPY 10 year chart - ForexAbode

Well, 140.00 can still try to exert its psychological pressure to bring some volatile sideways moves or even some consolidation.  However, the momentum is not showing any slowdown and the pair should at least complete the 61.8% retracement of the fall from 169.98 to 94.12 by targeting 141.00.

The previous resistance is now expected to turn into support and hence if the support in the range of 139.23 holds then it will be an indication for the reversal. In such case a hit to 145.00 should come in handy.

If the support at 139.23 fails then further consolidation may take place towards 135.23 before another recovery effort. We stay bullish for EUR/JPY.

You may also like to check EUR/JPY weekly analysis and also the daily outlook of EUR/JPY. Also do keep an eye of the Forex Daily Dose.

Please share your opinions in the comment box below to discuss the price action further.

Is GBP/JPY Up For Reversal?

December 1, 2013 in Chart Alert

Lehman Brothers had filed for bankruptcy on September 15th, 2008 and during that month GBP/JPY had shown a volatility of 1386 pips with the month’s high as 198.31 and low as 184.45. But then which currency trader can forget the month of October 2008? During that one month GBP/JPY had moved 6101 pips. Such volatility is rare to be seen. The high of the month was 189.93 and the low was 138.92.

Once the subsequent recovery failed at 163.07, the pair had remained in the ongoing downtrend which had started in 2007 till May 2012.  The upward gains which had started since then could have been just considered as a consolidation till the pair broke over 163.07.  The break over 165.00 could be taken as the second milestone and also as the second indication that GBP/JPY might have already bottomed up and may be on it’s way to the reversal. Other interesting thing is that the exact level of 116.84 had given support to GBP/JPY once again in September 2011. The fact that the support had come exactly at 116.84 for the second time also supports the idea that a bottom might already be in place from the longer-term perspective.

What should be the next target?

GBP/JPY 10 year chart - ForexAbode

Well, the momentum is not showing any indication of slowing down. The least what is now expected is a move towards 168.12 which will complete the 38.2% retracement of the long-term downtrend from 251.09 to 116.84. However the momentum also suggests that the pair may not only stop there but may try to take out the psychological resistance of 170.00 next. The previous resistance at 163.07 should now turn into support and if this support holds then who knows that GBP/JPY also manages to knockout 175.00  or more?

EUR/JPY also seems to be running on the same lines. Do check that at: Is EUR/JPY coming out of the reverse gear?

You may also like to check GBP/JPY weekly analysis and also the daily outlook of GBP/JPY. Also do keep an eye of the Forex Daily Dose.

Please share your opinions in the comment box below to discuss the price action further.