A downward bias is in play for the EUR/JPY pair this week, writes ForexAbode.com, although this is to be viewed only as consolidation, as signs of an upside reversal are now beginning to emerge.
For the next week, we are in favor of some more downward consolidation, but for that, a decisive break below 108.48/108.40 is required, as mentioned above. Such a break should bring a further downward move, first towards 107.50 and then possibly towards 106.50/106.65.
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This would represent the support of the 55-day exponential moving average (EMA) as well as the upper edge of daily Ichimoku cloud. Even if EUR/JPY breaks below this resistance zone, we would expect very strong support near 105.63 (March 7).
Please note that we will be taking any downward moves as consolidation and not as a bearish trend until any strong break below the psychological 105.00 level takes place.
On the upside, a break over 1) the recent 111.43 resistance, and 2) 111.62 (late-October 2011 resistance) is required for further upward moves towards 114.20 or more.
Please note that EUR/JPY has started showing the early signs of a trend reversal to the upside, but a better indication of the same will only come with a decisive break over 111.60 and then 112.00. At that time, 110.00 will become a support level instead of resistance.
By the Staff at ForexAbode.com
