We maintain that a triangle is complete at 158.60. Is the triangle perfect? No, but real market patterns rarely are perfect. The rally from 158.60 (end of triangle) is in 5 waves but is small relative to the triangle, making it likely that the advance is the first wave of the terminal thrust. A bullish bias is warranted against 158.60 but with 5 waves up from there, the EURJPY is susceptible to a correction back to at least 165.31.
As long as 219.30 is intact, we are treating the advance from 192.60 as a corrective 4th wave. Within the advance, the rally from 199.79 would equal the 192.60-208.94 rally at 216.13, very close to the 7/23 high at 215.84. Bears should keep risk to 214.91. The minimum objective is below 210.56. It is worth noting that the pair is testing the 200 day SMA and that the 21 day SMA has crosses above the 200 day SMA (bullish crossover) for the first time since August 2005.
The big picture focus remains on the A-B-C advance from the 2000 low at 58.82. Wave C would equal wave A (arithmetically) at 112.27 but waves A and C do not have to be equal. The advance has already satisfied minimum expectations and a long time support line has acted as resistance since December 2007. A break above this line argues for an extension towards 112. It is best to remain bullish against 98.27 and buy sharp pullbacks against there (unless the decline becomes impulsive). Fibo support begins at 102.50 and extends to 100.87.
There is no change to the bearish outlook for the CADJPY. “Price below 109.62 keeps the series of lower highs (and lower lows) intact; which is the definition of a bear market.” The 200 day SMA (above price at 106.42 and sloping down) keeps us confident in the bearish case. If we are correct in our bearish assessment, then 107.14 (and ideally 105.93) should remain intact. If the support shelf just ahead of 103 gives way, then expect the decline to accelerate.
We wrote last week that “the trend should be down for the next few weeks. Fibo support does not begin until 98.22.” Price has yet to reach 98.22 but should soon as bears keep pressure on the AUDJPY. A drop below 98.71 could complete a 5 wave drop from 104.45 and give way to a choppy corrective rally.
The NZDJPY has traded sideways since August 2007. The pair still fails to exhibit a clear wave pattern. However, we do know that a series of lower highs exists since July 2007 and that a series of higher lows exists since August 2007. Such evidence is usually indicative of a triangle. Under the triangle scenario, price would remain above 76.73 and thrust higher (above 83.01). A drop below 76.73 negates this count. It is probably best to stand aside right now.
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[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