Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Forex4you Technical Analysis 22 May 2013

EUR/USD: Tentative Recovery

The EUR/USD pair failed to follow-through after the bearish break below the July '12 trend-line. It has started to rebound, forming an inverted head and shoulders pattern with a neckline at 1.2930; a decisive break above which could lead to a rally up to 1.3070 eventually, although strong resistance at 1.2980, composed of the 50 and 200-day MA could slow progress on the way up. Given the overall bearish tenor of the chart, however, and the high event risk of Bernanke's testimony today, a continuation lower is also a possibility, with a penetration of 1.2840 required for confirmation, and - in a steep down-trend - a follow-through expected down to 1.2580.

USD/JPY: Still Channeling Up

The USD/JPY pair continues to rise within its bullish channel, although at a much slower rate then previously, and it looks vulnerable to a bearish breakdown. Momentum has, however, come off over-bought highs and given the dominant up-trend the pair will probably now rally up from the lower-channel line towards the upper line and an eventual target set after the breakout from the ascending triangle at 104.00. A move below yesterday's lows, however, at 102.34 could confirm a channel breakdown to a target at 101.35. Fed Chairman Ben Bernanke's speech today will probably cause some volatility in any case.

Analysis By: Joaquin Monfort, Forex4you Analyst

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether forex trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.