EUR/JPY and GBP/JPY Consolidates with Diverging Momentum; EUR/GBP Signals Further Downside
Daily Forex Technicals | Written by FXTimes | Dec 28 11 00:31 GMT
EUR/JPY and GBP/JPY Consolidates with Diverging Momentum; EUR/GBP Signals Further Downside
EUR/JPY
The EUR/JPY has found support at about 101.00 after a recent decline that started 10/31 from about 111.65. The 4H chart shows the market in it’s consolidation from the latest swing from 105.67 down to 101.03. We don’t even have 38.2% retracement yet but the market is already struggling, failing to break the pivot at about 102.50 (established 11/25). As it consolidates now, the 4H chart also show a bearish stance with the RSI reading staying below 60 after breaking below 30. This has been the case since the first swing coming down from 111.65. Another sign of a persistently bearish market is that it continues to trade under the 200 4H simple moving average.
GBP/JPY
Looking at the GBP/JPY, there was also a dip since 10/31, from 126.70 down to about 119.30. But starting Nov 25, the two started diverging. In EUR/JPY after a bounce on Nov.25, the market continued lower. For the GBP/JPY, since finding support on Nov.25 at about 119.30, it has been building bullish momentum. The RSI popped up above 60 and kissed 70. Since then, the 4H RSI reading has remained mostly above 40, and has been able to break above 70 again, suggesting a persistent bull market in the 4H time-frame. Price action has also now crossed above the 200 4H SMA.
EUR/GBP
As the year nears its end, the EUR has more downside pressure while the GBP appears to be building strength. As we take a look at the EUR/GBP, it appears to be consolidating, but within a bearish market. There is even a negative reversal signal, suggesting another swing down. Using a measured move, this swing could target 0.8260. Note that we 0.8280 is the 2011 low, so this can be the conservative target to the downside. Also note however, that while the EUR/GBP points south, it is trading near its channel support, so counter-trend forces can start to pick up here, especially if you see the RSI fail to dip back below 40.