Our new Weekly Trading Ideas report is the basis for all technical strategy. Instead of publishing commentary in accordance with a schedule (ex. Euro crosses Monday, Yen crosses Tuesday, etc.), technical strategy will focus on the best opportunities going forward.
This week; we are looking for entries on long EUR, CAD and AUD and short USD and JPY. Therefore the best crosses to trade are EURUSD, USDCAD, AUDUSD, EURJPY, CADJPY and AUDJPY. View the Weekly Trading Ideas for USD cross strategy. Here, we will focus on the other crosses listed above. Strategy is listed below the hourly chart commentary and only when patterns are clear and reward to risk warrants action.
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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.
It is possible that a complex correction (W-X-Y) is unfolding from the 152.11 low. Under this count, 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 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.
There is no change to yesterday’s count. “The short term wave structure also indicates that we should be bullish. Rallies have unfolded in 5 waves and declines in 3 waves, indicating that the larger trend has turned up. If the above count that counts the rally as a series of 1st and 2nd waves is correct, then price will remain above 105.04. Potential support is at 106.70.”
Strategy: Long from 106.70, against 105.04, 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.
Similarly, there is no change to yesterday’s commentary. “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.” Potential Fibonacci support is near 95.09. Price is too far away from the ‘line in the sand’ for us to get bullish right now.
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