Yen Crosses: Bearish Opportunities Setting Up

[DailyFx]

We maintain that the EURJPY has formed an important top and that the next big move is down in which we’ll see a break of the 149.25. Near term, the decline from 164.97 is probably a series of 1st and 2nd waves. The decline should accelerate this week. This outlook is intact as long as price is below 163.09.



We expect the GBPJPY decline to accelerate this week or next. In recent weeks, we have focused daily charts in order to find the end of wave 4 (within the 5 wave decline from 251.10). The 60 minute chart above shows that the decline from 208.98 is in 5 waves and is probably wave 1 of 5. Resistance should be strong at 204.40 (former 4th wave and 50% of 208.98-199.79).



The decline from 101.85 to 92.15 is only in 3 waves but is most likely wave A of a flat. In a flat, wave B often exceeds wave A in what is termed an expanding flat. We wrote last week that “the legs within wave B would be equal at 103.69, although a reversal could occur at any time.” As long as price is below 101.35 near term, consider a top in place at 102.75.



We maintain that the CADJPY is headed lower longer term (the series of lower lows and lower highs inspires confidence in the bearish assessment). There is potential resistance at 105.70 (3/5 high) but the bias is bearish as long as price is below 109.62.



We maintain that a major top is in place (likely a multi-year top at 107.84). We view the drop from 107.84 to 92.99 as wave 1 in a 5 wave bear cycle. Wave 2 takes the form of an expanded flat and is complete at 100.49. As long as price is below 100.49 (red line), the longer term bearish outlook is legitimate. The rally from 88.14 (a second wave itself) is in 7 waves and therefore a correction.




The choppy decline since the October high at 91.42 may be a series of 1st and 2nd waves. Under this count, the NZDJPY needs to remain below 88.11 for a C wave decline that will eventually come under 74.25 to remain on track. An alternate count treats the entire drop from 91.42 is an ending diagonal (similar to the EURJPY). Under this alternate, a wave 2 correction is underway towards fibo resistance in the 84/85.80 area. A rally through 88.11 would make this the preferred count. In both cases, lower prices are expected. The outcome would be delayed under the alternate count.

Tell us what you think about this report: contact the strategist about the article at jsaettele@dailyfx.com

TREND ANALYSIS is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.

SCHEDULE
Monday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Tuesday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD