Forex Video Briefing (8/25) – EUR/JPY and GBP/JPY
We are already looking at the EUR/JPY, which rallied from 135.73 a couple of weeks ago to 138.00 last week. This was the August high, and traders respected it as resistance. On the daily chart, we are already seeing price declining in a falling channel since April. Price has pushed below the 200-, 100-, and 50-day simple moving averages (SMAs), and the RSI has tagged 30 while holding below 60. These are signs of a developed bearish market in the daily time-frame. Now, after the hold below 138.00, price has retreated, but is stalling above 137.00. The 4H chart shows that if price clears below 137.00, it can clear the 200-, 100-, and 50-period SMAs, a rising trendline, which is already broken, and the RSI might fall below 40. All these will liberate EUR/JPY from its recent bullish correction mode into a bearish continuation mode, which has downside risk first to the 135.73 low, then a support pivot around 134-134.10. Now if price fails to break below 137.00, or does so but immediately pulls back up and breaks above 138.00, the next key resistance will be around 139.00, which you can see in the daily chart is where the 100-day SMA resides, as well as a falling channel resistance.
While the EUR/JPY is trading under the 200-, 100-, and 50-day SMAs, the GBP/JPY looks like it is trying to stay above them. It has broken below the 100- and 50-day SMAs, but is holding firmly above the 200-day SMA after a week of consolidation. The 171.00 handle is now key support, maybe without elbow space down to the 170.40 August-low. A break below 170.40 can open up first 170, then the 168.00 lows from March. This would shift the bullish mode back to a sideways mode, with some bearish bias. However, if price holds above 171.00 and breaks above 173.00, the GBP/JPY might be in bullish continuation at least toward 175.36 high on the year. You can see that a break above 173.00 will break above a falling trendline and the 50-day SMA, and thus open the pair up to its prevailing uptrend.