The anticipated reversal in the Yen crosses occurred today. Targets going forwards over the next few weeks is above 160 for EURJPY, above 100 for AUDJPY and above 109 for CADJPY. Bullish potential, however, is even greater.
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Sentiment measures, including COT data and recent media headlines, favor near term EURJPY strength. One potential count is a triangle from the July 2007 high at 168.94. Under this scenario, the EURJPY rally from 152.11 would continue for the next few weeks. Triangle resistance is not until about 165.00.
We wrote yesterday that the “EURJPY will come under 155.54 before embarking on the next leg higher. A potential end for wave X is the 61.8% of 152.11-159.11 at 154.78. A test of the low at 152.11 is also a possibility in the case of an expanded flat.” The EURJPY declined to 154.05 this morning before embarking on a 150 pip rally. This is probably the beginning of the rally that is expected to exceed 159.47.
Strategy: Long triggered at 154.85, against 152.09, target near 163/165
The decline from the November high at 125.55 may have ended at 101.82 as an A-B-C correction. Another possibility is that the decline from 125.55 is the first leg of a larger more complex correction. Both of these are near term bullish. The bearish count treats the decline from 116.83 as wave 3 within a 5 wave bear cycle from 125.55. One reason to lean towards the bullish bias is that the bounce has come from former support.
This strong rally has the earmarks of the beginning of a C wave within an A-B-C advance from 101.82. Very short term support begins at 106.15 and the pattern is bullish as long as price holds above 104.72.
Strategy: Previously stopped out of long:
Get Bullish near 106, against 104.72, target TBD
Much like the AUDUSD, the AUDJPY continues to rally in 5 waves and fall in 3. This indicates to us that the trend remains up as long as price is above the January low at 90.10.
“The rally from 90.10 to 96.49 is in 5 waves and probably wave 1 of a new 5 wave bull cycle. Wave 2 is the sharp drop to 93.63 and the short term bias is considered bullish as long as price is above this level.” After coming down to 91.15, the AUDJPY has taken off, rallying over 200 pips in just a few hours. This is the beginning of a rally that should exceed 100.15. Short term support is near 95.91.
Strategy: Get bullish near 95.75, against 94.15, target above 100.15
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