Yen strength and equity weakness have been the dominant themes so far in 2008. The Dow broke its November 2007 low yesterday and the August 2007 low is less than 100 points away. If that level (12,518 to be exact) gives way, then the Dow could fall apart. In the FX market, the same can be said for the Yen crosses; especially NZDJPY. If you want to play Dow weakness through the FX market, then take a look at NZDJPY. The patterns indicate that a historic decline may be just around the corner.
This is one count that we are tracking in NZDJPY. The decline from 97.74 to 74.25 is considered wave A within a large A-B-C correction from 97.74. A triangle may be in its final stages as wave B now. Fibonacci measurements suggest that resistance should be strong in the 85.40-.86.20 zone. The bias remains bearish as long as price is below 88.21. The pattern could be a bullish triangle, but given the patterns visible in the separate legs of the cross (NZDUSD and USDJPY), we favor the bearish triangle scenario.
This is another count on the daily, which is also bearish. The initial decline is still wave A but the rally from 74.25 to 91.42 would be wave B. Wave 1 of C is from 91.42 to 80.31(an argument can be made that the decline is in 5 waves…it is sloppy but 1st waves often lack clarity). Wave 2 of C is from 80.31 to 89.10 (this rally is clearly in 3 waves). Wave 3 of C is underway now, indicating that the decline is likely to accelerate. Similar to the triangle count above, risk is above 88.21. The objective for this decline is where wave C would equal wave A; at 67.94.
[B]Discuss Elliott wave counts on NZDJPY or any other pair at the DailyFX Elliott wave forum.[/B]
[B]CURRENT AND FORMER TRADES[/B]
