Next week should present golden opportunites to establish long positions in the EURJPY and AUDJPY.
Our new Weekly Trading Ideas report is the basis for all technical strategy. Instead of publishing commentary in accordance with a schedule (ex. Euro crosses Monday, Yen crosses Tuesday, etc.), technical strategy will focus on the best opportunities going forward.
This week; we are looking for entries on long EUR, CAD and AUD and short USD and JPY. Therefore the best crosses to trade are EURUSD, USDCAD, AUDUSD, EURJPY, CADJPY and AUDJPY. View the Weekly Trading Ideas for USD cross strategy. Here, we will focus on the other crosses listed above. Strategy is listed below the hourly chart commentary and only when patterns are clear and reward to risk warrants action.
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Sentiment measures, including COT data and recent media headlines, favor near term EURJPY strength. One potential count is a triangle from the July 2007 high at 168.94. Under this scenario, the EURJPY rally from 152.11 would continue for the next few weeks. Triangle resistance is not until about 165.00.
We wrote yesterday that “this is probably the beginning of the rally that is expected to exceed 159.47.” This view remains favored. Very short term, a drop below 155.03 is possible in order to complete a small 2nd wave. This would present a golden opportunity to get bullish against 154.05.
STRATEGY: Bullish, against 154.05, target near 163/165
The decline from the November high at 125.55 may have ended at 101.82 as an A-B-C correction. Another possibility is that the decline from 125.55 is the first leg of a larger more complex correction. Both of these are near term bullish. The bearish count treats the decline from 116.83 as wave 3 within a 5 wave bear cycle from 125.55. One reason to lean towards the bullish bias is that the bounce has come from former support.
Unfortunately, we did not get the opportunity to get bullish near 106 as the CADJPY just took off. At this point, ‘buyable’ support is in the 107.05/107.30 zone and risk is at 106.42. An initial objective is the 100% extension of 101.82-108.56/104.72 at 111.46.
STRATEGY: Get Bullish near 107.05/30, against 106.42, target 111.40
Much like the AUDUSD, the AUDJPY continues to rally in 5 waves and fall in 3. This indicates to us that the trend remains up as long as price is above the January low at 90.10.
We wrote yesterday that the AUDJPY rally from 94.15 is the beginning of the move towards 100.15 (and above) and that “short term support is near 95.91.” The low this morning was at 95.63 but a secondary low may be required before the ‘real’ advance begins. A drop below 95.63 could complete a small 2nd wave and present a golden opportunity to get bullish against 94.15 (much like the EURJPY). Support is at the 50% and 61.8% Fibonacci levels of 94.15-96.56 at 95.36 and 95.07.
STRATEGY: Bullish, against 94.15, target above 100.15
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