USD/JPY 4H Chart: Double Top
Comment: There are good reasons to believe that USD/JPY is bearish that and we should expect a strong sell-off. The currency pair has formed a double top pattern, and most of the four-hour and weekly technical indicators are pointing south. The decline will be confirmed once support at 122.20/08 is broken, and in this case the first target will be the 200-period SMA and weekly S2 at 121.40. If the latter support proves insufficient to negate the downward momentum, the next potential ceiling will be at 120.05, represented by the Oct 20 low and monthly PP. However, we should note that the market is already overcrowded with bears, being that 73% of open positions are short.
EUR/CAD 4H Chart: Descending Triangle
Comment: The outlook on EUR/CAD is currently bearish. The currency pair has remained in a strong down-trend since the end of September, and it has formed a descending triangle, which implies that demand for the Euro is weakening. We expect the price to close beneath 1.4150/27 and then continue going lower. The initial support will be at 1.4040 (weekly S2), but the main target will be a combination of the weekly S3 and monthly S2 at 1.3960/35.
On the other hand, a rally through the falling resistance line at 1.4230 will invalidate the negative bias, and the focus will shift on resistances, such as the Nov 23 high at 1.4280, weekly R1 at 1.4318 and Nov 12 high at 1.4390.
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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