EURJPY and GBPJPY Face Struggle as the Yen Weakens

The Yen currency pair has been a very slow mover this year – contrary to the 2nd half of 2012 and 2013 when the Yen weakness trend offered a ton of opportunity.

1)      The USDJPY consolidation has lasted for more than a half a year

2)      Price has been trapped in a tight 220 pip range for 4 months since the beginning of April

Within that consolidation, the USDJPY is breaking upwards and price could have space towards the top of the range (orange lines). The USD strength / Yen weakness is having an impact on the EURJPY and GBPJPY as well.

   29- 7- 2014 uj

EURJPY INVERTED H&S

The EURJPY has a potential reversal chart pattern named the inverted head and shoulders. The pattern is also occurring very close to a daily and weekly support level at 136.25. This is a scenario where a trend could have troubles with continuing – and the EURJPY down trend is certainly facing problems.

[tweetable alt=””]The trend lines help traders with placing clear “lines in the sand” on the chart.[/tweetable] Resistance and support trend lines mark the borders for our analysis:

1)      a break below support translates into a decent chance of a downtrend continuation

2)      a break above resistance translates into a decent chance of a reversal / retracement

  29- 7- 2014 ej

GBPJPY FLAT BUT BREAKING

The Ferrari of all the pairs (GBPJPY) has a similar structure: the GJ is also near daily support (magenta) and it too has mad multiple bounces off of a wedge (green line). Although the GBPJPY broke 2 neck lines (blue trend lines) of a head and shoulders pattern on top, price has not picked up any bearish momentum so far. The zones to monitor are:

a)      A break below the bottom (magenta) or

b)      A break above the resistance (light blue line)

 29- 7- 2014 gj

Happy Trading!

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