Yen Crosses Topped : Corrections Underway


[B]Commentary[/B] - We wrote last week that “the psychological backdrop that we discussed last week remains conducive to a top. A top (of which degree we are unsure) is either in place at 118.20 or a triangle is unfolding from 118.20.” As things turned out, the top was in place at 118.20 and the CADJPY fell hard, to 110.50 Friday. Near term, we are treating the bounce from 110.48 as wave 4 within the decline from the top (118.20). The top of wave 4 may already be in place at 112.80 (the 38.2% of 117.29-110.48 is at 113.08). We remain bearish and view the decline as the start of a new trend that will likely persist for months.
[B]Strategy[/B] - Remain bearish, against 114.48, Targets TBD

[B]Commentary[/B] - We wrote last week that “a top may be in place at 101.85. A drop below 99.90 would make the decline from 101.85 a 5 wave decline. This means that at least one more leg lower would be expected. Potential support is at 99.44 and 97.69.” The CHFJPY dropped to 97.54 Sunday evening and we are treating the rally since as a correction of the decline. Since the rally from 97.54 is either a wave 2 or a wave b, a corrective rally could continue until the 61.8% of the decline at 100.20. The pair has tested the 38.2% of the decline today at 99.18, so a continuation of weakness may be underway. 99.18-100.20 is the reversal zone.
[B]Strategy [/B]- Look to get bearish in 99.18-100.20 zone, against 101.85, targets TBD

[B]Commentary [/B]- The NZDJPY structure is the same as the other JPY crosses. That is, the decline from the top (97.74) is impulsive (5 waves) and indicates additional bearish potential. The 38.2%-61.8% of the decline (97.74-89.24) is 92.49-94.49. This is an ideal area to establish bearish positions for the next leg down.
[B]Strategy[/B] - Remain bearish, against 97.74, targets TBD (under 89.24)