this afternoon I worked on a comparison analysis between to major pairs: USD/JPY and EUR/JPY. In the following is the result of the analysis:
USDJPY vs EURJPY comparison & forecast, daily chart – February 21st, 2013
There is a major difference on the daily chart which can be spot analyzing the two charts compared above. Price action of both charts is the same but; while the Euro failed the next move higher, showing a Euro that is going to weaken faster than the Japanese yen in the coming days,that did not happen to the USD/JPY. So that means that bulls are not interested too buy the EUR/JPY pair at this stage (see below), while they could still be involved in long positions in the USD/JPY pair.
The USD/JPY pair (see picture above) did not fail the current long extension setup. Above the 91.60 level longs are still valid with a 1st target at the 94.90 area (scenario 1). The scenario 2. for the USD/JPY would develop if price falls below the 91.60 level. In that case we could see a move into the next level of support down at the 89.40 area.
As anticipated, the main difference between USD/JPY and EUR/JPY is that the latter failed the extension long. That happened the very moment price moved below the 123.30 level on Friday last week.The price is now in scenario 1, moving in traditional shorts with resistance between 125.30-125.80. First target is down at 121.80. Scenario 2 would kick if price would not bbounce off the next support level at 119.60 which lines up to the 2nd target in the 119.90 area. In that case, we could see a continued move lower.
The level of support on the EUR/JPY pair will be identified when the EUR/USD pair will also find support. I anticipate this support will come at 1.2900. Both USD/JOY and EUR/JPY could find their support when that happens.
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