EUR/JPY Daily Chart 10/18/2012 7:35AM EDT
Sharp rally: The EUR/JPY is making a new high since rallying from the July low of 94.10, as it pushes above the 103.86 resistance pivot. The rally has been holding above a rising trendline, and the RSI has tagged 70, now a 3rd time, without falling under 40, and even staying above 50. This strong rally has a recent 6-day streak that is now attacking a falling trendline that goes back to April, 2011 as it approaches the 104.00 psychological handle.
Falling wedge, trendline: The weekly chart shows a falling wedge development with support extending back to August 2010, and the resistance trendline going back to 123.31 in April 2011. The falling trendline is what the market is focused on at the momentum.
Breakout: Will the trendline hold? I think there is upside room until 105.25, 38.2% retracement for the market to show respect to this falling trendline. But above that, the market opens up a previous resistance pivot lies at the 108.00 handle.
If the market holds under 105 and falls under the rising trendline from July, 94.10 low, then a bearish outlook returns.
Bearish momentum: Also note that the weekly RSI is approaching 60, during the falling wedge, it has respected 60, and reflected persistent bearish momentum. If this wedge is to hold, it should hold the weekly RSI under 60 as well.
EUR/JPY Weekly Chart 10/18/2012