Strategy 06 November 2013 |
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EUR/JPY we are viewing the pattern developing on the chart as a potential rising wedge pattern,
this offers resistance at 135.67 and support at 132.01. These patterns are well documented reversal patterns and this one will complete on a weekly close below 132.01. We would also highlight the large bearish divergence of the weekly RSI on it recent move to a new high of 135.52 and highlight that the market recently reversed from its very long term retracement at 135.33 (23.6% retracement of the move down from the 1979 high). We look for this to now act as tough overhead resistance. All of these factors are bearish.
A weekly close below the 132.01 level should be enough to complete the pattern and introduce scope to 122.80. (See weekly chart attached).
Near term the market is seeing a small rebound from its 55 day ma at 132.68. We look for this to be tepid. Initial resistance lies 133.65.
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