USDJPY Tests Top of Range: Look for a Breakout to 118.00

  • Euro Decline 3 Waves So Far
  • Japanese Yen Breaking?Finally
  • British Pound To Exceed 2.0494
  • Swiss Franc Unclear
  • Canadian Dollar Will Be Choppy Before a Reversal
  • Australian Dollar Vulnerable to Yet Another High
  • New Zealand Dollar Same as Aussie


Commentary: There is no change from yesterday as the decline from 1.4281 is still in just 3. If the decline extends to 5 waves, then we?ll have an opportunity to get bearish against the high (1.4281). Keep in mind though that the nature of the decline to this point is corrective, which leaves the EURUSD vulnerable to a new high. Still, over the next month or so, we are looking for at least a return to 1.3828 (former 4th wave) and possibly 1.3712 (61.8% of 1.3360-1.4281). As the decline unfolds, we will be able to better ascertain bearish targets.

Strategy: Flat (waiting for clarity)

Commentary: “We have continued to state that we expect a return to 118.00 in order to complete wave C of the A-B-C from 111.59.” There is no reason to change the outlook for a rally to exceed 117.12 (minimum) as the USDJPY is testing the upper end of its nearly 7 week range. Near term , the rally looks likely to accelerate in a small wave 3 with 115.55 remaining intact. It is important to remember that we expect a top and reversal near 118.12 (100% of 111.59-117.12/112.59).

Strategy: Remain bullish, move risk to 115.55 (from 114.67), target 118.00

Commentary: There is no change to the Cable structure. Near term, the decline from 2.0494 is corrective and will very probably be exceeded while 2.0339 remains intact. Longer term, it is still possible that 2.0654 will be exceeded as the decline from there is in 3 waves. Under the bullish count, the rally from 1.9651 is wave 1 and the decline from 2.0366 is wave 2. Wave 3 then is underway now and if this is the case, then the rally should accelerate. However, given the possible bearish count in the EURUSD, caution is warranted. The longer term bullish case is valid as long as price is above 2.0084. The other possibility is that a larger complex correction is unfolding from the top (2.0654), such as a triangle or flat.
Strategy: Short Term Idea: Bullish now, against 2.0339, target 2.0500

Commentary: The USDCHF is essentially in the same position as the EURUSD. The rally off of the low (1.1623) is in just 3 waves so far, which leaves the pair vulnerable to a new low. Additionally, the rally from 1.1623 may be just the first leg of a correction in wave iv. Look for resistance in the 38.2% of 1.2151-1.1623 at 1.1825 (also a former congestion area). If the rally from 1.1623 unfolds in 5 waves (just 3 now), then it is likely that at least one more 5 wave advance will unfold and we will try and catch the next rally.
Strategy: Flat

Commentary: The drop below .9936 to .9910 appears to have completed wave v and larger wave 3 from 1.0676. Look for a rally in wave 4 to end near 1.0094 before a drop to yet a new low in wave 5 completes the bearish cycle from 1.0866 and leads to a much larger recovery. That ‘recovery? will present a USDCAD bullish opportunity. For now, patience is warranted.
Strategy: Flat

Commentary: We wrote yesterday that “the decline from .8947 may be in 5 waves and if that is the case, then there is a bearish opportunity. The rally from .8807 could very well be unfolding in 3 waves as either larger wave B or 2. Look for a short term bearish entry near .8894/.8917 (61.8%-78.6% of .8947-.8807).” Risk is low but bears should be careful. Upon further review of the charts, the rally from .8051 is unfolding as an impulse. Impulses are always in 5 waves or derivations thereof (such as 9, 13, 17, etc.). A rally to a new high (even if just a slight new high) above .8947 would satisfy minimum expectations and then lead to a reversal. We see this scenario is more probable given the bullish structure in Cable and Yen (pro-carry near term).

Strategy: Move to flat (from very short term bearish)

Commentary: The rally from .6824 is either the end of a correction (wave C) or wave 3 within a 5 wave bull cycle from .6639. Price has stalled within the former congestion zone (.7531-.7731). A larget setback over the next few weeks to the former 4th wave at .7304 is expected but that does not mean that a new high above .7668 is not possible (even probable) before the decline takes place.

Strategy: Flat
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.