April 25 2011 – Consolidations in the EUR/JPY and GBP/JPY
Simple Moving Average(SMA) 200-period (bold, gray)
RSI-14 with Simple Moving Average 5-period of RSI attached.
Elliott Wave Principles
Market and Price Action (patterns, candlesticks)
Intraday pivots and Intermediate-term support and resistance
Multiple Time-frame Analysis
Consolidation Setups in the EUR/USD, GBP/USD, EUR/JPY and GBP/JPY (4/22)
– The EUR/JPY charts show that the current correction to the rally from 116.60 low is not over. In fact the rally from 116.60 has not confirmed bullish intention as it remains below an important pivot at 120.75.
– A break above the 120.75 pivot targets the 123.30 April 2011 high.
– Before that we could be extending the current correction decline towards a zone between 118.45 (50% retracement) and 118.00 (61.8% retracement) level.
– A break below 118.00, suggests further correction towards 116.60. If the market continues lower and breaks below 115.50, the bullish scenario is invalid, and the outlook to 106-106.50 opens up.
– The GBP/JPY pair is also in consolidation. The bullish scenario is under threat, but the market remains bullish if it can remain above 133.83. Preferably, the current decline does not break below the sideways range, with support pivot at 134.68. However, a break below this is okay, given that it remains above 61.8% retracement near 134.10. This 133.83-134.10 support zone should be monitored. A break below 133.83 first targets 131.70, then a medium term decline back towards the 126-126.50 lows.
– If the market returns to the bullish mode, a break above 136.00 will be the first clue of bullish continuation. Then the 138.00 level is the short-term target. A break above that targets 140.00. This is all in the short-term. A break above 140.00 can lead to a medium term rally towards 146-147.
Will the EUR/JPY and GBP/JPY return to the bullish mode, or will the Japanese yen reclaim the strength it saw in 2010? We would love to hear your opinion.
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Fan Yang CMT
Chief Technical Strategist