Yen Crosses Show Signs of Reversing

RSI divergence warns of tops in the Yen crosses but there is no structural evidence of turns. As such, additional strength remains probable.

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. However, after trading through 137.46, my immediate bearish stance is negated. Additional strength should challenge Fibonacci levels at 141.80 and as high as 148.50 before a reversal.

British Pound / Japanese Yen

The GBPJPY rally has continued through the 38.2% of the decline from 2.1595 and is approaching the 50% at 1.6737. Expect additional strength to this level before reversal potential.

Swiss Franc / Japanese Yen

There is clear momentum (RSI) divergence with CHFJPY but there is no structural evidence of a top. Additional strength should challenge the 61.8% of the decline from 105.17. At that point, I’ll look for a top and reversal.

Canadian Dollar / Japanese Yen

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. The pair is trading at the top of a channel and the 50% of the decline from 107.23. Coming under 86.02 would suggest that at top is in place.

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 is testing the 50% retracement of the larger decline and divergence with RSI is bearish. A drop below the line extended from the 4/28 and 5/18 lows would suggest that a top is in place. Until then, bullish potential remains.

New Zealand Dollar / Japanese Yen

RSI divergence warns of a top but until there is structural evidence of a top, additional strength is likely. The next level of potential resistance is the 50% of the decline from 97.86 at 65.76. Only a drop below the line extended from the 4/28 and 5/18 lows would suggest that a top is in place.

[I]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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