Yen Crosses Going Parabolic Before Reversing?

DailyFX   |  February 16 2012 5:04 EST

After consolidating for several days, the Yen crosses may extend higher through February. Initiation of new longs are not a great idea here but stops should be moved higher on long term positions.

Euro / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

“The upside remains favored in the EURJPY towards at least 10440 (100% extension), channel resistance, which is at about 10520 on Friday (increases about 20 pips per day), and the December high at 10570. Near term support is 10330 and 10295. The 200 day average is above 10700 and could come into play in the event of a parabolic move.

Bottom line: long, stop 10180, targets 10520, 10570

British Pound / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The GBPJPY seems to be ahead of the EURJPY in that it has already reached its 100% extension (rally from the low consists of 2 equal waves), channel resistance and 200 day average. Still, the rejection of 2011 lows last month suggests that we respect additional upside towards the 161.8% extension and December high at 12730. 12400/25 is near term support and risk on longs can be moved up to 12260.

Bottom line: long, stop 12260, target 12730

Australian Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The AUDJPY continues to advance and the long cited ‘extended objective’ (100% extension of the rally from the October low at 8668) doesn’t seem so farfetched. That Fibonacci extension is also reinforced by the 161.8% extension of the 7477-8053 advance, at 8629. There is also potential resistance from the April 2010 high at 8805. Currently testing steep channel resistance, don’t be surprised to see some consolidation/pullback. Support comes in at 8460 and 8430. Risk on longs can be moved up from 8265 to 8350.

Bottom line: long, stop 8350, target 8650

New Zealand Dollar / Japanese Yen

Daily Bars

Prepared by Jamie Saettele, CMT

The NZDJPY pattern warns of a pending top and reversal. Price is putting steep channel resistance to the test but the big level to watch in the coming weeks is the trendline that extends off of the October 2009, May 2010, and August 2011 highs near 6800. Interestingly, the January 26th daily RSI reading of 77.62 was the highest since the 6/8/07 reading of 78.88. THE top occurred roughly a month and a half later on 7/24/07. With this in mind, I’m expecting a top near 6800 in early March. Near term support comes in at 6555 and 6530.

Bottom line: Flat

Euro / Australian Dollar

60 Minute Bars

Prepared by Jamie Saettele, CMT

“Last Tuesday’s outside day reversal did give way to 3 days of strength but price failed ahead of the late January highs and has now retraced most of the rally from 12133.” As long as the EURAUD is below 12477, trend should be considered sideways / down. 12250/80 is resistance.

Bottom line: Flat

Euro / British Pound

Daily Bars

Prepared by Jamie Saettele, CMT

“It’s difficult to see the EURGBP rally from 8221 as anything more than a 4th wave correction. As such, price is vulnerable below 8410. Still, exceeding 8410 would shift focus to the November low at 8485. Also don’t dismiss 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 EURCAD rally from the 1/17 low is left as a 3 wave structure, which leaves the EURCAD vulnerable to a drop below the January low at 12873. Doing so would expose the January 2011 low at 12778.” Price has reached trendline support and a bounce into 13130/50 would offer an opportunity to get short.

Bottom line: short on strength into 13130/50, stop 13260, target below 12870

--- 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.