By: Doug Rosen
For me to analyze this pair I must always look at the USD/JPY as well as the EUR/USD pairs because of course the EUR/JPY is simply the EUR/USD x USD/JPY. With that being said I am seeing some evidence that the USD/JPY may become a bit bullish since the USD/JPY recently double bottomed just above the weekly M3, a bullish sign to me which points to JPY weakness with this pair, and of course in my EUR/GBP review I did point out EUR weakness and I have recommended EUR/USD shorts. With all this being the case we would be basically looking at a weak EUR and a weak JPY. Generally, when we trade the markets we want to pair together a weak currency with a strong currency. What is the point of pairing together two weak or strong currency's together when we can pair together a weak with a strong and trade accordingly with an edge of some degree? So, when I am looking at both the weekly and daily charts of this particular pair I see priced crunched in between the lower Bollinger Band and the 5 ema.
Looking at the 4 hour I see the upper Bollinger pointing down and the lower beginning to point up. I also see on the 4 hour that the angle and separation of the ema's is diminishing.
Glancing at the 1 Hour chart the ema's are braiding with one another and the upper and lower Bollinger bands are pointing at each other. This really tells me that we are in the process of consolidation with this pair and may soon be in a tight range. The downtrend this pair was in as of yesterday has changed with due to yesterdays Swissy CPI report and the sharp move it caused this pair has further added to consolidation.
Looking at the 15 minute chart of this pair I see that the bollinger bands are narrowing and the ema's are braiding. This to me is a sign of low volatility for this particular pair.