Yen Crosses into Short Term Lows?

The Yen crosses have plummeted but are nearing potential support levels.  Oscillators are oversold and divergent on daily time frame and structure suggests that a corrective rally should begin soon.

Last week, I wrote that “the rally from 132.18 is in 3 waves, indicating that the downtrend remains intact.  The downtrend is healthy as long as price is below 139.”  The EURJPY has plummeted and is nearing the 2003 low at 124.12.  This potential support along with 5 waves down from 170 and the daily position of RSI suggest that the EURJPY will form some sort of bottom soon.

Long term, the rally from the April 1993 low is in 3 waves and an impulsive decline is underway from 251.  The implications are that the GBPJPY will eventually drop below the all-time low near 129.  Still, the decline to this level will not be a straight shot down.  Markets are not linear.  The drop from the peak at 216 is in 5 waves so a countertrend rally should begin soon.

Longer term, the initial bearish target remains 78.88 but like the other Yen pairs, a countertrend rally is possible from near current price.

I wrote last week that the break below the support line from 1995 confirms the long term bear that is underway.  The bearish trend is strong below 91.09.”  The CADJPY is now below 80 and well on its way to a full retracement of the entire rally from 1995.  Wave 3 of what should end up as a 5 wave decline from near 120 may be nearing an end (momentum extreme).

There is no change to the longer term analysis.  “An impulse is underway from the top and the decline should end at all-time lows.”  Shorter term, allow for a drop below 62.97 in order for the AUDJPY to complete 5 waves down from near 105.  A recovery back to 67-70 is then likely.

The NZDJPY is not as clear longer term.  The advance from the 2000 low could be an impulse followed by an expanded flat (shown above) or a 3 wave advance (indicating that the decline will eventually end below 41.94).  In any case, there is potential support from the 61.8% Fibonacci at 55.48 (reinforced by congestion from late 2002).     

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals  every weekday morning (9-10 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.

Contact him at jsaettele@dailyfx.com