EUR/JPY Challenges the 2015 Trendline

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EUR/JPY Challenges the 2015 Trendline

The euro is making quite a splash this week as it has been gaining across the board. Let’s take a look at the EUR/JPY in particular as it tags key trendline.

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The 4H chart shows a market accelerating higher forming a price bottom as it breaks above the 131.70 resistance. While price action looks sharply bullish, we can see that this is still a young bullish attempt as the moving averages are still mostly moving sideways. If there is a strong pullback, a bullish market should hold above 130 and the 4H RSI should hold above 40. If price falls below 129, we would very likely have a bearish continuation especially if the RSI also tags 30 again.

Now, on the daily chart, we see another challenge to the bullish outlook. We can see that EUR/JPY is now testing a falling trendline coming down from the December and 2014 high at 149.51. We should expect some near-term bearish attempt, maybe during the April 30 session. However, note that the daily RSI has broken above 60 and is about to tag 70. This shows a shift from a bearish trend at least to a sideways market if not bullish.

If EUR/JPY retreats, let’s keep our key on the 130 area and get ready for a bullish attempt to eventually break the falling trendline.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.