Yen Pairs Medium-Term Overview – Dec. 5-10, 2010

We are presenting below the Supports and Resistances as well as Risk-to-Reward forecasts obtained with the Forex AI platform calculator, for the major currency pairs that involve the Japanese Yen against the Euro, British Pound and US Dollar. You will also find a Medium-Term Overview for this week along with the Weekly and Daily charts for USDJPY, EURJPY and GBPJPY.

Weekly and Daily Close = December 3, 2010
Monthly Close = November 30, 2010

SUPPORTS AND RESISTANCES

MEDIUM TERM OVERVIEW

USDJPY

Weekly trend looks steadily bearish with prices evolving inside a descending channel, and heading towards the middle line where they will encounter a strong resistance area at the 84.00/86.00 level, which is also the 38.2% Fibonacci retracement from last swing low. A break to the upside would lead to the upper resistance level (50%) around 87.60/88.00 looking to reach again the upper trendline of the bearish channel. On the downside, we would have to break last lows and psychological level 80.00 for an extension to the 76.00/74.50 support area.

Daily charts show that the pair is performing a retest of the recently broken upper trendline of the bearish channel, with a fair possibility that the support holds and prices would therefore be heading for a retest of last highs, and if broken, push forward up 85.50/86.00 which are the next levels in extension and the resistance area of September highs. If the channel upper line doesn’t hold, we would see the prices going back inside the channel towards last lows and psychological level 80.00 as a first bearish target, with the possibility of reaching lower extensions at the bottom near 79.00/78.00.

EURJPY

This pair is evolving down in a bell-shaped descending channel with a series of widening bearish flags. Prices have been rejected from the upper trendline but last candle could be a pinbar that still has to be confirmed this week for a reversal to the bullish side or at least a retracement above last highs and tight consolidation zone near the 114.00 level. I would favor a bearish move in extension to break last lows and head towards parity as a first target, then EURJPY could reach further to the bottom of the channel in the support area between 0.9900 and 0.9700 (Fibonacci extension levels 127% and 138.2% of the last swing low).

On a second thought, we might be having an inverted head and shoulders pattern with 114.00 as the neckline, which break up could lead to 120.00 level as projection.

Daily charts show a steep fall that has been followed by a strong rejection on the support area at 108.50/109.50, from where we could reach back to the upper trendline of the channel. The pair seems to be in an ample consolidation between 106.00 and 115.00, so a break of any of those levels would be needed to define the next trend. Daily views are slightly to the bullish side because of the weekly bottoming pattern potential, but here again we need more confirmation signals to verify those premises. A break of 120.00 level would definitely be bullish.

GBPJPY

This pair has been in a tight consolidation since last May, evolving between 126.00 and 136.00 levels after a moderate bearish channel. Should we find a bottom at this point, the Geppy could retrace to the 144.80/145.00 resistance area though 136.00 level represents a strong barrier by now. A break of the the lower trendline could lead to an extension fall targeting the Fibonacci support area between 116.50 and 112.40. Consolidation might yet last for a while, though, and its actual pattern suggests the possibility of an inverted head and shoulders which neckline is about 134.00 with a first projection to 137.90/138.00, and further projection to the 38.2% Fibonacci retracement level at around 140.50.

We have a similar pattern on the Daily charts and the neckline would have to be clearly broken for the H&S to be confirmed. If the consolidation move continues further, we might attempt a retest of the lows. There is no definite direction for the trend by now.