Chart of the Day: EUR/JPY
EUR/JPY: The EUR/JPY has has obeyed the expected trajectory of the previously seen descending triangle, breaking significant triple bottom support at 121.60 level mentioned in our last technical report. This area became support turned resistance and contained prices after short sellers took profits and created a short term rally. Prices are now coming very close to breaking to new lows for the month. But when we pull out to the 4-hour charts, the next level of long term support can be seen in the 119.50 region, and there should be some buy orders clustered here. This will likely prevent this level from breaking on first test, but if we do see a downside violation, support levels are very thin so expect some significant bearish follow through.
EUR/USD: The Euro continues to dictate the direction in most of the major pairs, so we will look for updates in the EUR/USD to try to find areas where an upside reversal might be found. Now that we are firmly below both the 100 and 200 day EMAs, the bias is clearly bearish. This is supported by the fact that prices have been unable to break out of the downtrend channel that has been in place since the beginning of February. The next level of historical support comes in at 1.2660, so it is unlikely that we will see any meaningful rallies for the remainder of the week.
USD/CHF: The USD/CHF is starting come into the upper levels of a sideways range that is defined by resistance at 0.9550, and support at 0.9380. Both of these areas have been tested three times, so a break in either direction will be significant for the pair’s long term prospects. The MACD is now crossing into positive territory on the 4-hour charts, so it is highly that the break will be to the upside.
AUD/USD: The AUD/USD is stalling at the upper end of its medium term symmetrical triangle, with the next resistance now seen at 1.0470. The MACD indicator is flatlining now, so at the very least we will see some sideways trading near term. Next support comes in at 1.0365, so if we see a break here, the shorter term uptrend will have reached its completion point.