Yen Crosses: Strength Viewed As Corrective

Longer term downtrends in the Yen crosses may resume from current levels. Another possibility is that larger corrections will last for a few more weeks before pairs break significant lows.

EURJPY

The EURJPY fell in 5 waves from the July high at 170 and the rally from 147.50 is most likely a correction of that decline (I say most likely because there is the possibility that the drop from 170 completed a large expanded flat). Expect resistance near current price (wave 4 of one less degree). There is also potential resistance from Fibonacci at 158.36 and 161.04. Whatever corrective pattern is underway will probably continue for a few weeks.

GBPJPY

After much contemplation as to the GBPJPY count from the 2007 high near 251, I favor longer term weakness to complete wave C of Y within a combination correction from the mentioned 251. One reason to favor such as count is that an RSI extreme was registered with the low at 184.46. RSI (and any momentum indicator) extremes rarely occur at the same exact time as the price extreme. Bottoms (as well as tops) are usually marked by divergence. The B wave correction underway now may last for a few more weeks. Look for resistance near Fibonacci retracements of 2.1598-1.8446.

CHFJPY

This weekly chart shows the rally from the 2000 low as an A-B-C advance. Wave C is a diagonal, which should be fully retraced. Therefore, the bearish target is 78.88. Near term, the CHFJPY rally from 92.94 nearly reached the 50% of the drop from 105.17 before reversing. Still, additional ‘correcting’ is possible. Resistance near 100 should be strong; this is the 61.8% as well as the 200 day SMA.

CADJPY

Until a break under 95.66 or above 107.23, the CADJPY is a range trading candidate. It is possible that a triangle is unfolding from the March low, which ultimately would result in a bearish break. If a triangle is underway, then a near term top should form in the next few days. Be aware that a flat could unfold as well. In a flat, the CADJPY would spike above 107.23 before reversing and dropping below 95.66.

AUDJPY

The long term AUDJPY target is not until 74.15. This is the June 2004 low. I have designated this as a target because the rally from there can be treated as an ending diagonal (similar to CHFJPY). Diagonals are usually rapidly retraced. Near term, allow for the correction from 81.38 to play out. Again, this will probably take a few weeks…potential terminal points for the correction are 92.24 and 95.01.

NZDUSD

The drop below 67.77 satisfies minimum expectations for the end of the decline from 97.86 (which is wave C of an expanded flat). However, the decline has more to go as C waves subdivide into 5 waves and the decline is in wave 3 right now. As is the case with the other Yen pairs, a corrective advance is unfolding. Resistance in the weeks ahead is at 74.72 and 76.60 (Fibonacci).

DailyFX

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