We c favor the idea that a large C wave is underway from 164.97. Wave i of C is complete at 160.59 and wave ii is underway now. Potential resistance is from 163.30-164. The bearish target is not until below 149.25. Price must remain below 164.97 in order for this near term bearish scenario to remain intact.
We maintain that the GBPJPY rally from 192.60 is a correction. For one, the first leg of the rally is in 3 waves. Second, the extended nature of the decline from 242.60 argues that the GBPJPY decline from 251.10 will unfold in 5 waves rather than 3. Since there are only 3 down as of right now, we can expect another low. Near term resistance begins at 207.66 and a bearish bias is warranted against 209.
The decline from 101.85 to 92.15 is only in 3 waves but is most likely wave A of a flat. In a flat, wave B often exceeds wave A in what is termed an expanding flat. We wrote last week that “the legs within wave B would be equal at 103.69, although a reversal could occur at any time.” As long as price is below 101.35 near term, consider a top in place at 102.75. If 101.35 is breached, then it is likely that the pair will exceed 102.75 in order to complete a double zigzag from 95.12 closer to 103.69.
We maintain that the CADJPY is headed lower longer term (the series of lower lows and lower highs inspires confidence in the bearish assessment) but a test of the resistance zone from 105.70-106.63 is likely before the larger bear trend resumes. A rally to this level will set up a high reward/risk trade against 109.62.
We maintain that 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 is complete at 100.49. As long as price is below 100.49, the longer term bearish outlook is legitimate. The rally from 88.14 (a second wave itself) is in 7 waves and therefore a correction.
The choppy decline since the October high at 91.42 may be a series of 1st and 2nd waves. Under this count, the NZDJPY needs to remain below 88.11 for a C wave decline that will eventually come under 74.25 to remain on track. An alternate count treats the entire drop from 91.42 is an ending diagonal (similar to the EURJPY). Under this alternate, a wave 2 correction is underway towards fibo resistance in the 84/85.80 area. A rally through 88.11 would make this the preferred count. In both cases, lower prices are expected. The outcome would be delayed under the alternate count.
Tell us what you think about this report: contact the strategist about the article at <[email protected]>
[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: EURGBP, EURCHF, EURCAD, EURAUD, EURNZD
Tuesday: EURJPY, GBPJPY, CHFJPY, CADJPY, AUDJPY, NZDJPY
Wednesday: GBPCHF, GBPCAD, GBPAUD, GBPNZD
Thursday: AUDCHF, AUDCAD, AUDNZD