Most Yen crosses are likely to fall over the next few months, but rallies over the next several weeks are a possibility. In fact, COT data suggests that a multi-week high in the Yen is forming (low in Yen crosses). For another perspective on Yen possibilities, visit Intervention.
The drop from 167.64 can be viewed as a series of 1st and 2nd waves (following a major truncated 5th wave). Therefore, the EURJPY is entering a 3rd of a 3rd wave decline; often the fastest part of the decline. Price may accelerate lower now but an alternate count allows for a rally above 159.20 to complete a small correction. The larger bearish bias is intact as long as price is below 161.40.
The GBPJPY appears to have traced out 5 waves down from the November high at 241.35. Where does this fit in the larger pattern? Here are some possibilities. The drop could be wave 3 in a 5 wave bear cycle from 251.10 or a C wave that completes an A-B-C drop from 251.10. Another possibility is that the decline from 241.35 is a C wave but is extending and will subdivide lower; testing where wave 5 would equal wave 1 at 1.9341. This last scenario is what we favor subjectively, due to the individual patterns in the USDJPY and GBPUSD. A test of the 50% of 213.49-203.47 at 208.48 or the 61.8% at 209.66 is possible before the decline accelerates.
We still maintain that the CHFJPY has been in a triangle since the July top at 101.85. Triangles unfold in 5 waves (A-B-C-D-E). Wave E is probably underway now and could reach 97 or 96 before the bullish thrust from the triangle occurs. Another count is even more bullish and treats the rally to 100.72 and decline to 95.12 as waves 1 and 2 in a new bull cycle. Under this count, the CHFJPY would accelerate higher soon. To summarize, out 2 best counts are bullish for the coming weeks and maybe months.
We maintain that the CADJPY trend is headed lower. A 3rd wave or C wave is underway from 116.83. Wave 1 of that bear leg is complete at 101.82 and wave 2 is complete at 109.62. Wave 3 is underway now. An alternate allows for a push above 109.62 in order to complete a complex correction (the up, down sequence since late January would be viewed as waves W and X in this case).
A major top is in place (likely a multi-year top at 107.84). We view the drop from 107.84 to 92.99 as wave 1 in a 5 wave bear cycle. Wave 2 takes the form of an expanded flat and could be complete at 100.49. However, a push through 100.49 does not negate the long term bearish bias – but would rather just delay the outcome.
The 97.74 to 74.25 drop could be wave A in a large A-B-C decline. Everything since has been wave B, which may be unfolding as a triangle. If so, then expect wave d to complete soon before a rally in wave e gives way to the bear leg that challenges 74.25 and lower levels.
[B]
Tell us what you think about this report: contact the strategist about the article at <[email protected]>[/B]
[B] [B]TREND ANALYSIS[/B] is based on a rolling pivot model. LONG TERM TREND is determined by the last 3 months of price data (high, low, close). SHORT TERM TREND is determined by the last 4 weeks of price data (high, low, close). R3, R2, R1, PL, PH, S1, S2, and S3 are provided to aid in identifying entries and exits. These are objective measures and our subjective analysis (STRATEGY) may differ.
[B]SCHEDULE[/B]
Monday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Tuesday: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD
[/B]