- EURJPY correction looks mature
- CADJPY resistance at 86.00
- AUDJPY rally tests former support line
- NZDJPY and GBPJPY remain above support lines
Euro / Japanese Yen
I wrote last week that “corrections tend to take more time than impulses and the decline from 139.17 took 13 days. As such, additional choppy action with an upward bias over the next several weeks would not be a surprise.” The correction has now taken 7 days. Price is testing a short term resistance line and divergence with RSI above 70 favors a reversal. Favor the downside against 139.17.
British Pound / Japanese Yen
Fitting with the top and reversal theme, a head and shoulders top is still visible in the GBPJPY. While the pattern warns of a break lower, a drop below the support line drawn off of the January, April, and May lows would indicate that the rally from 118.79 is complete. Until then, there is the risk of additional gains. The next resistance levels would be 165.16 and 167.38 (Fibonacci).
Swiss Franc / Japanese Yen
The bearish count above, in which an A-B-C rally from .7466 is complete, is valid as long as price is below 91.56. Wave C consists of 5 waves with wave iv as a triangle.
Canadian Dollar / Japanese Yen
The CADJPY has broken beneath channel support, which is strong evidence that the rally from the January low is complete. More importantly, the structure of the CADJPY decline is bearish. The count above is most probable in my estimation. Expect a partial recovery before the next leg down begins; initial resistance is just above 86.00.
Australian Dollar / Japanese Yen
Like the other Yen crosses, it is possible that the corrective rally from the 2008 lows is complete. Wave C of the A-B-C rally can be counted as an impulse (5 waves) with wave 5 as a diagonal. The lower diagonal line (ii-iv line) was broken and the AUDJPY is now testing that line as resistance. Favor the downside against 80.50.
New Zealand Dollar / Japanese Yen
RSI divergence continues to warn of a top and reversal in the NZDJPY. A daily close 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.
[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.
Please send comments about this report to <[email protected]>[/I]