Today’s declines in the Yen crosses does not confirm that tops are in place. In fact, a few crosses are likely to make one more high before reversing sharply (notably the AUDJPY). The CADJPY and CHFJPY have reversed sharply from 50% retracements.
Euro / Japanese Yen
Following the 5 wave decline from 170, the EURJPY rallied in 3 waves and reversed. Since the high in early April at 137.46, I was fairly confident that 137.46 would not be challenged. After trading to 138.00 today, my immediate bearish stance is negated. Still, current price is in the area of the former 4th wave, which is a common reversal level. Considering this and RSI divergence, I would lean to trading the short side. Continued strength would meet resistance at Fibonacci levels at 141.80 and as high as 148.50.
British Pound / Japanese Yen
The GBPJPY rally has continued through the 38.2% of the decline from 2.1595 and is between that level and the 50% at 1.6737. The pair is in ‘no man’s’ land and it is difficult to take stand either way at the current juncture. Even so, I am expecting a top in a 4th wave so favor weakness.
Swiss Franc / Japanese Yen
There is clear momentum (RSI) divergence with CHFJPY and the pair is trading at its 50% retracement of the decline from 105.17. The evidence favors a reversal.
Canadian Dollar / Japanese Yen
In an alert yesterday, I wrote that “the last 2 days’ highs have touched the top of a channel and the 50% retracement of the decline from 107.24-70.85. Although above the 200 day SMA, the closely watched moving average maintains a strong negative slope. RSI has spent the past 2 days in overbought territory as well. Clearly there is no evidence that a top is in place but there are many warning signs. Structurally, a 4th wave is expected to come to an end soon and the area of a small degree 4th wave (from October 2008) stretches to 91.00.” Today’s reversal does not confirm that a top is in place but does the turn scenario more probable. Favor the downside.
Australian Dollar / Japanese Yen
The AUDJPY drop from 104.55 was a clear 5 wave affair (no labels) and the advance from 55 is corrective. Price reversed today just shy of the 50% retracement of the larger decline and divergence with RSI is bearish. Structurally, the pair may need to stage one rally in order to complete an ending diagonal from 66.80. A drop below 70.50 would suggest that a top is already in place.
New Zealand Dollar / Japanese Yen
5 waves up from the low (44.19) along with RSI divergence at the top favors a reversal. The rally from the low could be wave A of a larger corrective pattern that will take many months to unfold. Even so, a drop in wave B would be expected to reach at least 52.90 (4th wave extreme). Like the AUDJPY, the NZDJPY may exceed 63.36 in order to complete an ending diagonal. I have showed a triangle count here. Coming under 55.20 would confirm that a top is in place.
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.
Please send comments about this report to <email@example.com>