Registered: Mar 2004
Posts: 1939

Sorry, couldn't quickly find a recent thread on this.

I think I said a few months ago that the cross seemed to be driving the market in USD for the two majors. Still think that way.

Got a chance to reexamine my charts and will post here.

Take a look at EUR/JPY which is definately trading in a rectangle from 148-150.50 since its massive run up this year from 140.

Here's the daily:

Attachment: eurjpy daily oct 06.png
This has been downloaded 123 time(s).

Registered: Mar 2004
Posts: 1939

And here is the weekly. Look at that run up after breaking out of that long term triangle.

Attachment: eurjpy weekly oct 06.png
This has been downloaded 78 time(s).

Registered: Mar 2004
Posts: 1939

So then, look at USD/JPY. While we all know the yen pretty much does what it wants, you can't disagree that at least at present, it is in a pretty well established uptrend since May.

Attachment: daily usdjpy oct 06.png
This has been downloaded 73 time(s).

Registered: Mar 2004
Posts: 1939

OK, we're getting there.

Now look at EUR/USD.

Here's the daily:

Attachment: daily eurusd oct 06.png
This has been downloaded 85 time(s).

Registered: Mar 2004
Posts: 1939

And here is the weekly:

Attachment: weekly eurusd oct06.png
This has been downloaded 62 time(s).

Registered: Mar 2004
Posts: 1939

OK. Sorry, but trying to make a point here.

If we presume that EUR/JPY remains rangebound for the foreseeable future, perhaps with a midpoint price of 149.25, and USD/JPY continues its uptrend (target price of 120), the reciprocal EUR/USD price is targeted at 1.2437.

If the Yen trend is persistent, and we see USD/JPY of, say, 124, the reciprocal EUR/USD price is 1.20!

Even if we take the upper limit of the band (150.50) with a more reasonable 122, EUR/USD still calculates out at 1.2330. This is probably sufficient to break the weak support level at 1.2450 and confirm a resumption of the EUR/USD downtrend that was interrupted by the classic head and shoulders that developed over the last two years.

Interesting, isn't it?

Comments and opinions welcome.

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