Some Froth in the Yen Cross(es) but Upside Still Favored

DailyFX   |  February 9 2012 5:06 EST

The Yen crosses can probably squeeze out a few hundred more pips on the upside over the next week. Stops are moved up.

Euro / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The upside remains favored in the EURJPY towards 10440 (100% extension) and channel resistance, which is at about 10425 on Friday. There is also a trendline from the April and November 2011 highs that intersects with the December high (10570) this week. 10270/90 is support tonight and risk on longs can be moved up to 10210 (from 9985). A drop below 10210 would shift focus to probable support at 10160.

Bottom line: long, stop 10210, targets 10440, 10570

British Pound / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

Longs remain favored towards the confluence of the 100% extension of the 1/13-1/25 rally and 200 day average at 12435/55. Channel resistance intersects this level on 2/13. Near term support comes in at 12240/70 and risk on longs can be moved to 12200 (from 12045). A drop below there likely triggers a move back to 12100/40.

Bottom line: long, stop 12200, target 12400-12500

Australian Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The AUDJPY has taken out its January high and 9 month trendline, which exposes the October high (and intervention high) at 8395. The specter of 5 wave advances from the 12/15 and 1/30 lows indicates reversal potential so keep risk to 8315 (moved up from 8185). A drop below would shift focus to 8260 and 8190. An extended objective remains the 100% extension of the rally from the October low, at 8668.

Bottom line: long, stop 8315, target 8600

Canadian Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The CADJPY has broken through the January highs and objectives going forward are channel resistance, the October high at 7964 and a Fibonacci confluence at 8080/8100 (100% extension of rally from October low and 161.8% extension of rally from November low). Risk on longs can be moved up to 7730 (from 7575). A drop below would shift focus to 7670-7700. 7780 is short term support.

Bottom line: long, stop 7730, target 8080

Euro / Australian Dollar

Daily Bars

Prepared by Jamie Saettele, CMT

Tuesday’s outside day reversal indicates that the EURAUD decline from the November high may be complete (an objective was just below 12000 but it would be foolish to ignore the reversal evidence) in 5 waves. The implications are for strength, perhaps as high as 12700+ over the next few months. Bulls are struggling with the 2/3 high and 20 day average so long shouldn’t get overly aggressive. The stop should remain 12130.

Bottom line: long, stop 12130, target open

Euro / British Pound

Daily Bars

Prepared by Jamie Saettele, CMT

Tuesday’s comment that “today’s move through the early month high decreases confidence in a bearish bias” still rings true as the EURGBP has extended gains through its 50 day average. Exceeding 8410 would shift focus to the November low at 8485. Also respect the potential for continued sideways action between 8250 and 8410. I don’t see a trade here.

Bottom line: flat

Euro / Canadian Dollar

DailyBars

Prepared by Jamie Saettele, CMT

“The decline from the 1/27 high is clearly corrective and today’s advance shows impulsive characteristics. As such, a more important low may be in place at the 1/17 low than previously thought. Exceeding 13251 would shift focus to the 100% extension at 13374. Channel resistance intersects this level next week.” Support comes in at 13140 and 13170.

Bottom line: long on weakness below 13170, stop 12995, target 13400

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

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Jamie is the author of Sentiment in the Forex Market.