Japanese Yen continues to fade



CADJPY— CADJPY bounced off of support from the confluence of the 200 day SMA / 61.8% fibo of 98.26-104.40 at 100.61 last week and may be headed to test the 104.00 figure yet again. Daily oscillators are predominately bullish again as CCI and MACD are noth > 0. Chart structure on the hourly is also bullish as it appears that the pair just completed a 4th wave correction of strength which leaves a 5th wave of strength left. We can estimate an end to the 5 wave bullish sequence by adding the length of wave 1 (101.88-100.57 = 123 pips) to the beginning of wave 5 (102.81). This calculation yields 104.04, which is tight at the beginning of the resistance zone that is bound from the 7/6 high at 104.03 and 6/29 high at 104.40.


CHFJPY — CHF/JPY is interesting in that the monthly, weekly, and daily charts all show bearish divergence with oscillators but the pair refuses to turn. Also, the long term structure of the uptrend suggests that we may have higher to go before reversing. The uptrend that began in September 2000 has taken on a 5 wave bullish pattern (labeled). This final wave has been choppy and is an ascending triangle. The break above the triangle represents the exhaustion of the move up and breaks above ascending triangles often make one final thrust to a Fibonacci multiple of the widest point of the triangle (which is wave 4 in this case). Thus, potential turning points are at the 127% fibo of 92.19-78.92 at 95.77, the 138.2% fibo at 97.24 (also a previous top in 1998), and the 161.8% fibo at 100.35 (also former top in 1998). Support is at the breakout area of the ascending triangle (former resistance) at 91.75/92.20.


NZDJPY— Kiwi continues to slaughter the Japanese Yen as NZD/JPY is up for the 8th day in a row. The pair is up 376 pips in those 8 days but may be encountering resistance at current levels. If the view is that a 5 wave downtrend ended at 67.76 on 5/15, then what should follow from that point is a 3 wave correction. The third wave of the correction began at 68.90 on 6/28. Wave 3 (begins at 68.90) would equal wave 1 (67.76-72.35) of the large correction at 73.49 (current level). However, this is not much of a correction of the overall downtrend from 87.05 to 67.76. The 138.2% fibo extension of corrective wave 1 is at 75.24 and the 38.2% fibo retracement of the 87.05-67.76 downtrend is at 75.13. A rally to those levels would fit the theme of one more thrust in the JPY crosses before a turn. However, some consolidation of gains going forward is certainly possible. Hourly RSI is in overbought territory. Support is at yesterday’s high at 72.89 as well as the 6/12 high at 72.35.


Glossary of Terms

CCI(20) — 20 day Commodity Channel Index

> 0 — bullish
0 > — bearish
> 100 — extremely bullish
-100 > – extremely bearish
RSI(14) — 14 day Relative Strength Index
> 50 — bullish
50 > — bearish
> 70 — overbought
30 > – oversold
MACD ? – MACD slope (MACD — MACD[1])
> 0 — bullish
0 > – bearish
Mom(8) — 8 day Momentum (shorter-term direction)
> 0 — bullish
0 > – bearish
ATR(14) — 14 day Average True Range (volatility)
Medium — 75th percentile* > ATR(14) > 25th percentile*
High – > 75th percentile*
Low — 25th percentile* >
ADX(14) — 14 day Average Directional Index (directional strength)
> 30 — strong
30 > – weak

*measured against past 3 months