EUR/USD Looks Good Long on Dip, USD/JPY Short on Smallish Rip
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EUR/USD pop off long-term level has more short-term upside in sight
The drive off the one-year underside trend-line has been surprisingly strong, and with it momentum looks set to take EUR/USD further into resistance over the 11500-mark. From a risk/reward perspective a pullback before entry looks like a prudent play. No pullback, no trade, from where I sit.
A smallish decline though could offer dip-trippers an opportunity to take on a trade of 150 pips or so. The exact timing at the moment is still up in the air with weakness needed first, but the Euro at least looks primed to make good on last week’s surge.
Looking for strength to carry higher into the low-11500s before arriving at a big test. A decline below 11300 would be concerning for longs and put the Euro back at risk of declining further, possibly below last’s low and the underside trend-line from last November.
EUR/USD Daily Chart (More momentum into resistance)
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USD/JPY out of wedge, bounce may offer entries for another leg lower
USD/JPY fell out of a wedge last week after coming very near a strong area of resistance running over from May of last year. Ideally, the initial entry was on the wedge break, however; a small bounce from here could still offer traders a chance to catch more weakness down to around 11200 or worse if trend support doesn’t hold. It’s not a great set-up at this juncture for the swing trader, just as is the case with EUR/USD, but the path of least resistance for short-term traders looks fairly clear at the moment.
USD/JPY Daily Chart (turn from near big resistance)
USD/JPY 4-hr chart (Looking for another entry after wedge-break)
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.