Yen Crosses: Risk of Sharp Declines Remain

The GBPJPY and CADJPY are at 2009 highs but the other Yen crosses remain below their respective highs (possible divgergence here). In fact, the declines in the EURJPY, CHFJPY, AUDJPY, and NZDJPY are in 5 waves; suggeting that the long term declines in those pairs have resumed.

[B]Euro / Japanese Yen[/B]

It remains a ‘wait and see’ game regarding the EURJPY. The decline to 124.37 was in 5 waves, indicating that the larger downtrend has most likely returned. An expected countertrend rally ended following 3 waves (at 134.86). The wave principle teaches us that the 5 wave moves are with the larger trend and that 3 wave moves serve as corrections. The minimum objective is below 124.37 and the bearish forecast is intact as long as price is below 137.50. Much greater bearish potential exists, possibly below 112.00 in the months ahead. A small degree correction may be complete at 133.55.

[B]British Pound / Japanese Yen[/B]

The GBPJPY rally has continued to a new 2009 high. The overlapping waves indicate that the rally is corrective (triple three?) and that the long term trend is still down. There is potential Fibonacci resistance at 155.92 (38.2% of decline from 215.98).

[B]Swiss Franc / Japanese Yen[/B]

The CHFJPY pattern is the exact same as the EURJPY. The minimum objective is below 82.66 and the bearish forecast is valid as long as price is below 90.05. The rally from 84.02 can be counted as a 3 wave advance, increasing the odds that price stays below 88.11.

[B]Canadian Dollar / Japanese Yen[/B]

The GBPJPY and CADJPY patterns are the same. The overlapping nature of the rally from the January low (68.36) strongly suggests that the rally is corrective and will be therefore be fully retraced (eventually). Keep an eye on the pair up to 87.55, which is former resistance (circled) and a potential reversal area.

[B]Australian Dollar / Japanese Yen[/B]

The AUDJPY rally from the October 2008 low can be classified as a flat (flats have subwaves 3-3-5). Wave C is in 5 waves, which satisfies structural requirements for the end of the rally. The long term objective is below 55.00. Staying below 76.20 keeps the bearish count on track.

[B]New Zealand Dollar / Japanese Yen[/B]

The NZDJPY reversed right at the origin of its 5 wave decline. The minimum objective is below 52.89 and staying below 60.40 keeps the bearish outlook on track. Looking out a bit further, the drop from 60.40 may eventually extend below 44.19.

Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.

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