Forex4you Technical Analysis 01 August 2013

EUR/USD: Sideways consolidation extends

The EUR/USD spiked above the 1.3300 pivot level temporarily after the FOMC yesterday, but failed to hold and has fallen back down, and overall the sideways consolidation persists. Next we will probably get a reversal at the range lows (either here or 1.3210) and a move back up to the highs as it extends. There is insufficient evidence the broader up-trend has finished, however, because there are no strong reversal bars at the highs, or bearish candlesticks, or price patterns: the trend-line has been broken three times, buts that's not enough on its own. A breakout below the consolidation lows would be a very bearish signal, with a target at 1.3100. In its absence we must continue to assume the up-trend wholesome. The R1 weekly pivot at 1.3337 is at the new range highs and if it is broken decisively would give bullish confirmation, although the tough trend-line at the key 1.3400 juncture is not far now.

USD/JPY: Broadening formation

The up-trend may resume; prices have reached strong support from an old trend-line and the monthly pivot at the current 97.64 lows and formed a small broadening formation visible on the hourly chart. This pattern is usually reversal and indicates a break higher up to a target at 99.50. Price has just broken higher out of the pattern already, however, the 50-day MA is at 98.95 resisting further gains. A decisive move above the MA is necessary to confirm the breakout – although at that point there won't be much further to go before reaching the target. There is also the possibility of a bullish continuation up to resistance at the 100.10s. The longer-term up-trend is intact, although we are currently stuck in a consolidation.

Analysis By: Joaquin Monfort, Forex4you Analyst

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