EUR/JPY Assessing Near-term Rally Attempt

Daily: The EUR/JPY pair held from breaking above 125.00 and the 50-day SMA. This is also the 38.2% retracement area.

The stochastic is crossing over as well, all signs of bearish forces in the short/intermediate term.

Also, the market has turned bearish according to the MA orientations, as the 50SMA crossed 200SMA back in December 2009.

4H: The 4H chart shows a 61.8% retracement holding near the 123 level. Also this completes the second leg of a bullish gartley.

The stochastic is crossing over near the oversold area. However the price action is not showing a strong rally attempt yet, so further decline is possible.

If the market breaks below the rising trendline and 78.6% retracement, further decline towards 121.0 can follow.

If the market breaks above, we may have a short-term rally swing, which could still be in the context of intermediate bearish mode. This swing could be projected to the 126.20 area, but looking at the 1H time-frame below, the 124.00 (50.0% retracement) area will be challenge too.

As long as the market stays below 127.00, it is likely to be bearish.

1H: The near-term chart in the 1H time-frame shows that the market is still held from going above a sharp declining trendline.

The current rally attempt therefore has not been convincing, and as I am posting, is turning bearish after testing 123.50. Even if there is a successful short-term rally attempt, the 124.00 level will have some resistance.

The stochastic shows possible bearish continuation.

Therefore, for now, any rally attempt should be faded as the market has been bearish in the daily. In the 4H and 1H, the MAs suggest it is bullish. The fact is, the market is consolidation in a declining market so anticipate a break below the rising trendline in the 4H time-frame.

If this break is sustained, look for a target near 121.00

Capital Market Services, L.L.C.
www.cmsfx.com

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All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.