EUR/JPY Will The Bullish Mood Continue?

September 26, 2012 in Forex Analysis

EUR/JPY – What to Expect

EUR/JPY fell strongly from 103.86. The fall had started before testing the 61.8% retracement of the downward move between April 1st to July 24th.

EUR/JPY Daily Chart 1:

EUR/JPY daily chart 1

The fall also took place before testing the mid-term upper trend line resistance.

EUR/JPY Weekly Chart:

EUR/JPY weekly chart : trend lines

The 5-day EMA has crossed below 22-day EMA to give a bearish signal. 5 day EMA is the green line and 22-day EMA is the yellow line in the following chart.

EUR/JPY Daily chart 2:

EUR/JPY daily chart 2

All the above points add to the overall bearish sentiments even though the short-term trend have been bullish after some optimism came about Greece rescue plans.

The current price is seems to be finding some support at 55-day EMA. Please check  daily chart #2 above in which the red line is 55-day EMA.

What to Expect:

If EUR/JPY breaks below 55-day EMA support then we can expect some more downward move towards first 99.20 and then possibly towards 99.00 which is 38.2% retracement of the recent upward move (daily chart #2 above). Such a move will  neutralize the recent bullish sentiment. A better confirmation will come with any decisive break of 99.00. On the other hand if the support holds and a break over 101.00 takes place then we will expect the recent upward move to continue for a retest of 103.86 first and then possibly towards 105.00 psychological level. Such a move will also test the mentioned trend line resistance.

Please note that even if further upward consolidation take place, till a strong break of 105.00 does not take place, overall we will stay bearish.

 

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