USDJPY Short Term Bearish Pivot at 115.32

  • Euro Decline Appears Corrective So Far
  • Japanese Yen Bearish Pivot at 115.32
  • British Pound Still Looking for a Test of 1.9961
  • Swiss Franc Choppy From 1.1993
  • Canadian Dollar 1.0475 a Brick Wall
  • Australian Dollar To Drop Below .8051
  • New Zealand Dollar Looking to Test .6869

SEE A DECRIPTION AT THE BOTTOM OF THIS REPORT FOR JTRENDW AND JTRENDD


Commentary: Continue to favor the downside. We wrote yesterday that “a decline should unfold correctively with potential for a bottom to form near 1.3497 (61.8% of 1.3360-1.3719).” This count appears to be on track. Another count has the entire rally from 1.3360 as larger wave B within a more complex correction from 1.3852. If this is the correct count, then wave C of the correction should be underway now and the decline should accelerate soon. Dropping mich below 1.3497 favors the latter scenario. Either way, both scenarios are near term bearish.

Strategy: Remain Bearish, move risk to 1.3728, target 1.3510 and TBD


Commentary: The USDJPY continues to trade in a range but a break below 115.33 gives scope to a test of the 61.8% of 113.86-116.61 at 114.91. There are many possibilities right now. A triangle could be unfolding as wave B within the large A-B-C correction from 111.59, or a flat as wave B, or wave C may be underway from 113.85. We can say that “the USDJPY has traced out 5 waves lower (which is large wave 1)from 124.13 to 111.59, indicating a large degree trend change.” Since the low at 111.59, an A-B-C correction is unfolding as large wave 2, although, as mentioned, the strucutre of that decline is not clear. A cautious bearish bias is warranted now, against 116.46, as there are 5 waves down from 116.46 to 115.64. One possible outcome is detailed in the chart above.

Strategy: Flat (waiting for wave 3 bearish opportunity)


Commentary: The structure of Cable is similar to the EURUSD. 5 waves higher may have ended at 2.0233, so we are looking for a decline to at least the prior 4th wave at 1.9961. The 61.8% of 1.9651-2.0233 at 1.9874 is also a potential bottoming point. An alternate count is much more bearish and places Cable in a large wave C decline from 2.0233 within a larger complex correction from 2.0632. As is the case with the EURUSD, the structure of the decline will alert us to the proper count (if in 5 waves, then favor the more bearish count).

Strategy: Flat


Commentary: There is no change to the outlook that calls for a terminal thrust to come under 1.1815 while 1.2215 remains intact. “The daily chart shows a clear 5 wave rally from the December 2004 low to the November 2005 high. Everything since has been a correction. However, the correction is not complete. A complex correction has unfolded from the November 2005 high (W-X-Y). Wave X is a triangle, which means that we should expect a terminal thrust lower to complete the correction. The thrust to 1.1815 is most likely just the first leg of wave Y lower. As such, we are looking for price to come under 1.1815 before any meaningful bottom is in place.” Near term, price just tested the 61.8% of 1.2215-1.1993 (wave 1 of Y). 1.2135 may be the top of wave 2 of Y, so this is a high probability, high reward/risk bearish entry. The rally from 1.1993 is clearly corrective as the waves are choppy and overlapping.
Strategy: Remain bearish, against, 1.2215, target below 1.1815


Commentary: There is no change to the outlook that calls for a terminal thrust to come under 1.1815 while 1.2215 remains intact. “The daily chart shows a clear 5 wave rally from the December 2004 low to the November 2005 high. Everything since has been a correction. However, the correction is not complete. A complex correction has unfolded from the November 2005 high (W-X-Y). Wave X is a triangle, which means that we should expect a terminal thrust lower to complete the correction. The thrust to 1.1815 is most likely just the first leg of wave Y lower. As such, we are looking for price to come under 1.1815 before any meaningful bottom is in place.” Near term, price just tested the 61.8% of 1.2215-1.1993 (wave 1 of Y). 1.2135 may be the top of wave 2 of Y, so this is a high probability, high reward/risk bearish entry. The rally from 1.1993 is clearly corrective as the waves are choppy and overlapping.
Strategy: Remain bearish, against, 1.2215, target below 1.1815


Commentary: The rally from .8051 is most likely wave b of B within an A-B-C from .7673. Look for a drop below .8051 and possible test of the 61.8% of .7673-.8333 at .7925. A bullish opportunity presents itself there as we would then look for price to turn higher in wave C of the correction from .7673 and eventually test the 61.8% of .8870-.7673 at .8412.

Strategy: Flat


Commentary: The NZDUSD already tested the 61.8% of .6639-.7272 at .6881, so it has been out contention that a b wave low was already in place at .6869. However, Kiwi has falied to turn higher, opening up the possibility of a test of .6869. The next potential support level would be the 78.6% at .6775 followed by the low at .6639. Given the outlook for the Aussie, we expect one more rally leg (above .7272) before the next major bear wave.

Strategy: Remain bullish, against .6869, target .7500
JTRENDW uses 13 week RSI in order to gauge strength of trend. The trend is considered Bullish if the indicator registers a reading above 60. The trend is considered Bearish if the indicator registers a reading below 40. If the reading is between 40 and 60, then the reading is Flat. The JTRENDD uses 13 days of data. An example of JTRENDW is below for the EURUSD.