EUR/USD: Signs of Recovery
The EUR/USD is slowly channelling higher. A break above the next trend-line at 1.3065 would be a very bullish sign and could indicate the start of a reversal, however, the thick knot of Moving Averages consisting of the 50, 100 and 200-day MA's situated in-between 1.3070 and 1.3085 offer strong resistance. A break above these MA's at 1.3090 would open up a move higher to the upside target at 1.3175. There is a bullish harami marking the lows on the daily chart supporting a bullish view and potentially signalling a reversal. Today has been an up-day so far. However, resistance might hold a bit longer and we could initially see a move back down to the lower channel line at 1.3015, although it would require a decisive break below that to signal a deeper penetration to 1.2962.
USD/JPY: Touching 50-Day MA
The USD/JPY pair continues to rise. It has just broken up through a trend-line and will probably now reach the next target higher at 99.42, although the 50-day MA at 99.20 could interrupt the climb temporarily. Another bullish sign includes a possible large inverted H&S at the lows, the neckline of which is just below the current price, indicating it may have been breached, or is in the process of being broken. This pattern has a target at the 103 highs. Overall a clear break above the 50-day would be critical, marking a major resumption of the bullish trend back up to the 103 highs (the target for the inverted H&S). Alternatively, a break below 98.20 could mark a breakdown and possibly cancel out the inverted H&S, resulting in a move down to 97.15.
Analysis By: Joaquin Monfort, Forex4you Analyst
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