On Monday (7/14) we saw the EUR/JPY rally providing traders another chance to push lower in the already bearish EUR/JPY. I explained about the trade set up here:
EUR/JPY – Technical Signs for an Imminent Bearish Swing
EUR/JPY 4H Chart 7/16(click to enlarge)
Here is a followup as traders indeed faded the EUR/JPY from this week’s 138.45 high. The bearish swing from 138.45 adds to the bearish outlook with more room to fall:
– The swing showed respect to various resistance factors including 1) A previous rising support, 2) the moving averages in the 4H chart, 3) July’s falling trendline
– The RSI also showed bearish momentum developing as it held below 60. Now there is still more room to run before intra-day traders consider the bearish momentum oversold.
Where will the EUR/JPY end up?
The daily chart shows us the market is turning from a bullish 2013 to a sideways 2014 that might be turning bearish. For now, as price trades above the 2014 low of 136.22, we should limit the bearish outlook in the short-term. In this short-term bearish outlook there is room toward 136.22, the 2014-low
Note that the dynamics in the daily chart with price, moving averages and the RSI are similar those in the 4H chart. The alignment of bearish outlooks from the 4H and Daily chart is a powerful signal for a bearish outlook in the short-term.
Again, that 2014 low of 136.22 is in sight.
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