EUR/USD: continuation higher probable
Eurodollar has pulled-back into the 50-day MA and a cluster of other support levels. The correction isn't strong and the up-trend is expected to continue. There are no signs it is over yet but we are in the 50 to 61.8% zone where retracements often end. For confirmation I would be looking for a bullish turn in price and a rally evolve higher, back up to the 1.3205 highs, completing the final, leg up. If we see a decisive move below the 1.3000 level, however, then it will probably signal a break lower to around the 1.2850 congestion level.
The USD/JPY has formed what is probably a pennant pattern just underneath the 50-day MA. It will probably now break lower, with the possibility of a move unfolding all the way down to support at 97.90. For bearish confirmation I would be looking for a break below 98.60. The monthly pivot and weekly S3 pivots clustered together at 97.90 provide an initial target down, with 97.30 another, and eventually even possibly 96.00, if the pennant full-fills its target. For an upside recovery to take shape, a break above the 50-day would be required– with a move above 99.60 perhaps acting as confirmation – and a target at resistance at 100.60.
Analysis By: Joaquin Monfort, Forex4you Analyst
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