Bear Clouds in EUR/JPY Begin to Precipitate

03 December 2009

The FX Trader's view -

MONTHLY CHART: This year's recovery failed just ahead of the old highs from 2003/2004 and the 141.00 50% retracement level.

Repeated failure to break through this has recently led to an initial bear signal on the Daily chart.

DAILY CHART:

Last week there was finally a clear bear break below key support around the 129.75/130.00 area.

This initially opened the way for a test towards the 50% pullback level -but the strength should be there to push lower in due course.

Note the lower 1.618 swing projection (from the Oct 129.01-138.51 upleg) around 123.14, for example.

Overhead, the 50% bounce level at 132.70 offers possible resistance to a s/term rally - it doesn't matter that the former key support level has been surpassed by the s/term bounce; the damage has already been done.

Any sellers into that 50% level would likely have initial stops just above the 135.71 04-Nov high, as a recovery through here would certainly negate the bear analysis.

Philip Allwright

Mark Sturdy

Seven Days Ahead

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