CADJPY
CHFJPY
NZDJPY
Commentary – We wrote last week that “our contention with an outright bearish bias at this point is that the decline from the top (125.55) is far from clear in terms of structure. A clear 5 wave decline is not visible. An unclear wave from a significant top (or bottom) usually means that a larger more complex correction is unfolding (triangle, flat, double combination…etc). With this in mind, the CADJPY will likely see a bounce near term, although the lack of clarity in the pattern makes it difficult to determine where a rally will end. Chart resistance is at 112.00, 114.57, and 117.21.” We were correct to lack confidence in the bearish bias as the CADJPY spiked through 108.09 and tested 107.87 before rallying 400 pips. The rally from the low is an impulse, indicating that one more advance will occur and likely test the 38.2% of 125.55-107.87 at 114.62. However, with the appearance of 5 waves down from 125.55 (which we are labeling large wave 1), we expect a larger wave 2 correction to test the 50% and maybe the 61.8% at 116.71 or 118.79 over the next month.
Strategy – Bullish against 107.87, target TBD
Commentary – Last week, we wrote that “the CHFJPY has been stuck in an range that taken the form of a wedge from the 11/14 high at 99.77. A falling wedge is a corrective pattern and is an opportunity to get bullish. With this in mind, a bullish bias is warranted against 97.45 (bottom of wedge).” The pair broke higher and risk can be moved to 97.78. Favor the upside as long as this level remains intact. The 200 day SMA at 98.39 should provide decent support. We expect a new high (above 101.85) before a larger setback.
Strategy – Flat
Commentary – The triangle scenario that we presented weeks ago continues to play out. “All of the 3 wave movements in the NZDJPY suggest that a triangle is unfolding.” The only question is whether the triangle is a bullish one or bearish one. If it is a bullish one (black labels and arrows), then expect a drop in wave E of the triangle to 83.00 or so before a thrust to the upside. If the triangle is bearish (red labels and arrows), then price will drop but in wave D and then rally towards 86.00 in wave E before a terminal thrust lower that brings price below 74.25. The way to play this best is as a breakout. Buy a break above 90.06 and sell a break below 80.31. We will keep on top of this pattern and try to identify a better entry so keep an eye on the TopBottom report on FXCMTR.
Strategy – Flat