USD/JPY 4H Chart: Channel Down
Comment: As USD/JPY proved unable to sustain a rally beyond 121, the pair is currently trading within the boundaries of the bearish channel.
However, the downward momentum needs to pass a serious test before it can continue pushing the price lower. The US Dollar is currently facing a formidable demand area near 116. Apart from being a falling support line, this is also a level of a neck-line of the double top pattern, meaning there is likely to be a strong sell-off in case it is breached. Meanwhile, in the short-term, there is a high probability of a rally up to 118, namely the upper trend-line of the channel and the Jan 15 high.
EUR/NZD 4H Chart: Channel Down
Comment: Despite a massive sell-off yesterday, there are signs EUR/NZD continues to respect the trend-lines forming the bearish channel. At the moment the currency pair seems to be well-supported at 1.48. Accordingly, the base case scenario is a rebound from the demand area.
However, the rally should be capped by the cluster of resistances at 1.53, where the down-trend line merges with the monthly S1 and Jan 14 high. Intactness of this supply area ensures validity of the overall bearish bias towards EUR/NZD. In the meantime, the sentiment of the SWFX market is distinctly bullish with respect to the Euro—three fourth of open positions are long.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
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