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The Japanese yen rally didn’t take a break with the rest of the world, rising high against the majors, including EUR/JPY.  We can see a basic descending triangle pattern here that has already broken the previous lows and looks like gaining steam once again.

EUR/JPY 1-Hour Forex Chart
EUR/JPY 1-Hour Forex Chart

If this is a fakeout and the pair bounces higher, look for sellers around the top WATR, falling trendline, and moving averages. But likely, this pair is making a run for new lows, with 130.00 as the major psychological area to watch and see if buyers will hop in.

  • WO: 130.53
  • Top WATR: 131.63
  • Bottom WATR: 129.43
  • PWH: 132.46
  • PWL: 130.47


GBP/JPY 1-Hour Forex Chart
GBP/JPY 1-Hour Forex Chart

The British pound has had a rough time lately and when combined with a strengthening yen, the odds don’t look that great for a bounce in Guppy.  Look for the breakdown to continue and I wouldn’t expect much support until testing the major psychological level of 175.00.

If there is a bounce to a potential resistance setup similar to EUR/JPY above (WATR, trendline, moving averages), then the bears are likely there ready and waiting to get in at a better price.

  • WO:177.15
  • Top WATR: 178.65
  • Bottom WATR: 175.65
  • PWH:180.20
  • PWL: 177.05


EUR/GBP 1-Hour Forex Chart
EUR/GBP 1-Hour Forex Chart

EUR/GBP volatility tightened up over the holiday, which leads me to look for breakout plays when the range is tighter than the average true range. Of course, with the pair trending higher all December my short-term bias is to the upside, so the third time may be the charm for the pair to break above the .7400 psychological level.

On a pullback to the previous week’s low (PWL) area, I’ll see if we get support there and reverses it back higher before going with my bias. .7450 is the next likely area of minor resistance, so I may not take the upside breakout because of the low R:R potential.

  • WO: .7365
  • Top WATR: .7428
  • Bottom WATR: .7303
  • PWH: .7409
  • PWL: .7335

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