EUR/JPY rebounded strongly after edging lower to 113.63 last week and reached as high as 131.02. Subsequent retreat indicates that an intraday top is in place and turned outlook neutral. Near term focus is now on 121.38 minor support. As long as this minor support holds, the rebound from 113.63 may still extend further. However, below 121.38 will indicate that rebound from 113.63 has completed and will bring retest of this low.

In the bigger picture, the biggest question now is whether the fall from 169.96 has completed a five wave sequence already. The failure to break through the near term trend line provided no hints. But in any case, 113.63 is at least a short term bottom and some more consolidations should be seen as long as 113.63 low holds. Breaking of 132.18 will indicate that the five wave sequence has likely completed and a medium term bottom is in place at 113.63. In such case, medium term consolidation should be seen between 113.63 and 141.73 cluster resistance (50% retracement of 169.96 to 113.63 at 141.79) and will take a longer time to complete.

In other words, it’s just a matter of the time and range such consolidation will take. After all, upside is still expected to be limited below 141.73 cluster resistance. Whole down trend from 169.96 is still expected to resume. And break of 113.63 low is needed to confirm that such down trend has resumed. Read the rest of this entry »

Daily Pivots: (S1) 117.57; (P) 121.09; (R1) 127.8

EUR/JPY’s rebound from 113.63 extended further to as high as 127.29, touching mentioned 4 hours 55 EMA. At this point, intraday bias remains on the upside as long as 118.13 minor support holds and further rebound could not be ruled out. Though, upside is still expected to be limited below 132.18 resistance and bring down trend resumption again. On the downside, below 118.13 will flip intraday bias back to the downside for retesting 113.63 low. Break will indicate recent fall has resumed for 200% projection of 169.96 to 147.03 from 156.84 at 110.98 next.
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Daily Pivots: (S1) 134.27; (P) 136.41; (R1) 138.03

EUR/JPY weakens further to 133.78 today and at this point, more downside is expected as long as 138.65 minor resistance holds. Retest of 132.19 low is in favor. Break will confirm that recent down trend has resumed for next long term fibonacci level at 129.46 (50% retracement of 88.97 to 169.96). On the upside, though, above 138.65 will suggest that consolidation from 132.19 is still in progress for another test of 141.73 before completion. But still, upside should be limited below 147.03 resistance and bring down trend resumption.

In the bigger picture, the sharp fall from 169.96 is still in progress and has taken out long term fibonacci level of 38.2% retracement of 88.97 to 169.96 at 139.02 without hesitation. The development so far suggests that fall from 169.96 is developing into a five wave decline and EUR/JPY is probably in the middle of it only. Medium term outlook will remain bearish as long as 147.03 support turned resistance holds and another fall is still expected even in case of correction, targeting 61.8% retracement of 88.97 to 169.96 from at 119.90.

EUR/USD’s rebound from 132.19 was limited at 141.73 and reversed. Further fall is now mildly in favor to retest 132.19 low. Break will confirm that recent down trend has resumed for next long term fibonacci level at 129.46 (50% retracement of 88.97 to 169.96). On the upside, though, above 138.96 will suggest that consolidation from 132.19 is still in progress for another test of 141.73 before completion. But still, upside should be limited below 147.03 resistance and bring down trend resumption.

In the bigger picture, the sharp fall from 169.96 is still in progress and has taken out long term fibonacci level of 38.2% retracement of 88.97 to 169.96 at 139.02 without hesitation. The development so far suggests that fall from 169.96 is developing into a five wave decline and EUR/JPY is probably in the middle of it only. Medium term outlook will remain bearish as long as 147.03 support turned resistance holds and another fall is still expected even in case of correction, targeting 61.8% retracement of 88.97 to 169.96 from at 119.90.

In the long term picture, the three wave corrective structure of the up trend from 88.97 (00 low) to 169.96 suggests that it’s merely a correction to the multi decade down trend from 285.56. The impulsive nature of the fall from 169.96 indicates that it’s likely resuming the down trend. Hence, 61.8% retracement of 88.97 to 169.96 at 119.90 should at least be reached with odds of extending the down trend further to retest 88.97 low in the long run.

Before last week started, European leaders announced a rescue plan that includes state guarantees on bank debts until the end of 2009 with maturities up to five years. The governments are allowed to recapitalize financial institutions by buying bank stakes with preference shares or other instruments. ECB also pledged to look at enlarging access to the system of guarantees to include commercial paper even though it doesn’t have the legal power to do so yet. Germany later passed the bank rescue package which includes up to 400b euros in bank guarantees, 5% provision of losses and recapitalization funds up to 80b euros. France will create an entity to assist banks and guarantee limit will be up to 320b euros. Austria implemented a 100b euros rescue plan which provides support to the banking system mainly via guarantees while the government is also allowed to buy shares in Austrian banks.
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Free Forex Signal

Pair: EUR/JPY
Buy/Sell: Sell  Executed 10/16/2008  5:39 am GMT
Entry: 134.07

Target 1: 133.20

Stop: 134.51
Signal date: 10/16/2008 5:39 am GMT

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By : freeforexsignal

Daily Pivots: (S1) 132.69; (P) 134.52; (R1) 136.82

EUR/JPY’s recovery from 132.19 extends further to as high as 137.65 today but after all it’s still limited below 139.72 key near term resistance. With 4 hours MACD staying above signal line, intraday outlook is neutral for the moment and some more recovery could still be seen. However, there is no confirmation of a short term bottom yet and another fall is still in favor as long as 139.72 resistance holds. Sustained trading below 132.19 low will pave the way to next target of 50% retracement of 88.97 to 169.96 at 129.47. On the upside, though, above 139.72 will indicate that a short term bottom is in place and bring lengthier consolidation. Nevertheless, rebound should be limited below 147.03 resistance and bring down trend resumption. Read the rest of this entry »