EUR/USD, USD/JPY & More: Chart Set-ups, Technical Outlook

Technical Outlook:

  • EUR/USD coiling up on major long-term support
  • USD/JPY building a short-term wedge pattern

The Euro has been largely directionless the past few weeks, with the range contracting into a wedge pattern. The good news about this is that it means a move is likely to develop soon as lower volatility gives way to higher volatility. EUR/USD remains precariously positioned on the trend-line extending up from 1985 (using the constituents currency prices). It is very long-term in nature and thus needs to be given some room. The line needs to be drawn with a crayon, not a fine-point pencil. With that said, a break below 10636 (March low) is seen as a trigger for getting some separation from the line on the downside. On the flip-side, we still can’t rule out that despite the weak attempts to rally so far, that the Euro isn’t building a base to run higher. A break of the wedge and trade above 10991 is seen as getting momentum turned towards higher levels.

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EUR/USD Monthly Chart (ready to break or basing?)

EUR/USD monthly chart

EUR/USD Daily Chart (coiling up price action)

EUR/USD daily chart

EUR/USD Charts by TradingView

USD/JPY appears to working on a descending wedge, which given the context of it developing after a thrust off a swing-high suggests we could see a breakdown soon. The 10692 level is critical here as it was tagged to the pip twice this month. A rally could certainly develop, but at this time a breakdown is seen as the “easier” path to trade. If we do get a breakdown, the broader trend is not clear, but a move to the 104 area seems reasonable given current levels of volatility.

USD/JPY 4-hr chart (wedge forming, 10692 important support)

USD/JPY 4-hr chart

USD/JPY Chart by TradingView

For all the charts we looked at, check out the video above…

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX