The Yen crosses have rallied significantly from their August lows. In this report, we have provided 9 detailed charts, including one for each of the 7 Yen crosses and the Dow. Some pairs are likely going to break their July high while some are likely to reverse at key Fibonacci levels that we have identified.
The monthly pivot resistance zones are calculated using the prior month?s high, low and close. These are projected resistance levels.
We have favored for months now a larger rally to more fully correct the 124.13-111.59 decline. With the USDJPY trading at the top of its range, the pair may be about to break higher in wave C to complete the correction from 111.59. Measured objectives for the end of the correction are where wave C would equal wave A at 118.12 and the 61.8% of the entire decline at 119.34 (reinforced by the former 4th wave at 119.84). Given that this is our preferred outlook, we would not be surprised to see the other Yen crosses continue substantially higher (some will likely test/exceed the former highs). The best trade in our mind is a short at 118.00, against 124.20, target below 111.59 (probably close to 100.00).
This is an alternate count for the USDJPY. This count has a triangle unfolding from the low. The structure is still overall bearish as we would expect a thrust below 111.59 but price must remain below 117.12 for this count to remain valid. Under this scenario, the Yen crosses would all turn down now.
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Historically, October is a bad months for stocks as are years ending in the Number 7 (Decennial pattern). The chart of the Dow shows why we favor the count that has the USDJPY (and other Yen crosses) rallying first and then reversing. The decline from the July high (14021.38) is clearly a 3 wave correction and the rally since is unfolding as an impulse. A setback is possible near term in a small wave 4 before a rally to a new high to complete 5 waves from the August low (12518.51). A measured objective for the end of the rally is a Fibonacci extension at 14427.66. A rally to this level may resolve in a crash. In summary, we are looking for a rally to be followed by a top and reversal of significant proportion over the next few weeks (same as the JPY crosses).
<SPAN style=“FONT-SIZE: 8pt; FONT-FAMILY: Arial”><SPAN style=“mso-spacerun: yes”> All of the crosses are simply an extension of the USDJPY. Under the preferred interpretation, the EURJPY continues higher and likely tests the high made in July at 168.94 in what is likely wave B of an expanded flat before formation of a double top and reversal that leads to a decline below 149.25. Be sure to check the EURJPY analysis every Monday under the DAILY, currency crosses section of dailyfx.com.
<SPAN style=“FONT-SIZE: 8pt; FONT-FAMILY: Arial”> Under the preferred interpretation, the GBPJPY continues higher and likely tests the 61.8% of 251.10-219.30 at 238.95 or the 78.6% at 244.29 before a top and reversal that leads to a decline below 219.30. Given the triangle in wave B of the A-B-C from 219.30, it is clear that the rally is corrective and that the GBPJPY will eventually come under 219.30. Given the outlook for a roughly 200 pip rally in the USDJPY from current price, it seems most likely that the GBPJPY reversal will occur near the center of the Fibo zone (241/242). Be sure to check the GBPJPY analysis every Thursday under the DAILY, currency crosses section of dailyfx.com.
Under the preferred interpretation, the CHFJPY chops higher and rests the 78.6% of 99.77-92.15 before a top and reversal that leads to a decline below 92.15. Given the triangle in wave B of the A-B-C from 219.30, it is clear that the rally is corrective and that the CHFJPY will eventually come under 92.15. Be sure to check the CHFJPY analysis every Tuesday under the DAILY, currency crosses section of dailyfx.com.
The rally from 103.38 is unfolding as an impulse in a large wave 5 to complete a larger rally. Under this interpretation, the pair is likely to exceed 118.20 and test the upper level of monthly pivot resistance near 119.00 prior to a top and reversal. Be sure to check the CADJPY analysis every Tuesday under the DAILY, currency crosses section of dailyfx.com.
The rally from 85.95 is unfolding as an impulse in a large wave 5 to complete a larger rally. Under this interpretation, the pair is likely to exceed 107.70 and test the upper level of monthly pivot resistance near 109.00 prior to a top and reversal. Based on where the rally is in its structure, there is a good chance that the advance from here is choppy. Be sure to check the AUDJPY analysis every Wednesday under the DAILY, currency crosses section of dailyfx.com.
The rally from 76.93 is either a 3rd wave in a 5 wave impulse or wave c and the end of the correction. The pair has stalled at the 61.8% retracement of the former decline. Given the outlook for the Yen in general, a setback at this point is possible but a reversal and drop below 74.25 from current levels does not seem likely. The next level of resistance is the 7/31 high at 92.34 and then the 78.6% extension at 92.71. Be sure to check the NZDJPY analysis every Tuesday under the DAILY, currency crosses section of dailyfx.com.
