The EUR/JPY pulled back after a double top was completed during the 8/8 trading session. The pullback was held below 97.30 which was at about the middle of that double top, which ranged between 96.70 and 97.80. Then during the 8/9 European session, the market fell lower. It should be noted in the 1H chart that bearish momentum is developing as the RSI tagged 30, failed to push above 60, and then kissed 30 again.
As we get into the 8/9 US session, the market found support at 96.33 and is pulling back toward the 97.00 handle, which would coincide with the declining trendline seen in the 1H chart. Will the market be able to stay anchoring away from the double top? . A break above the previous resistance around 97.30 would invalidate the double top breakout.
Otherwise, if the bearish move extends, we have 96.05 as a swing projection, and 95.55 as a double top breakout target. By that time, the market may also be testing a rising trendline around 96.60, as seen in the 4H chart.
If the market falls below 95.50 and the 4H RSI dips below 40, we expose further bearish outlook first toward the 94.90-95.00 support and psychological area, then the July low at 94.10.
EUR/JPY 4H Chart 8/9/2012 10:27AM EDT