EURJPY- Having reversed its Friday losses to close strongly higher on Monday, the risk is for the cross to convincingly break the 104.95 level, its Sept 27’2011 high. Once this occurs, further recovery strength will develop towards the 106.05 level, its Sept 15’2011 high. A cap should occur here and turn the cross back lower in the direction of its medium term weakness. Its daily RSI is bullish and pointing higher supporting this view. Alternatively, the risk to this analysis will be a return below the 100.75 level, its Oct’2011 low. This will resume its long term downtrend towards the 100.00/99.87 levels, its July’2010 lows. However, note that price hesitation may continue to occur here due to its big psychological significance but if it breaks, further declines should shape up towards the 99.00 level and then the 98.00 level, all representing its psycho levels. All in all, though recovering, the cross continues to hold on to its long term downtrend.
