Yen crosses remain range bound, watch these key breakout levels
Key Levels, Technical Indicators & Carry Trade
CAD/JPY
Canadian dollar bulls remained on a bid side of
the market as they captured more territory from the Japanese yen longs and
continued to establish new all time trading highs for the cross. As Loonie longs
continue to press their luck a move above the 96.50 line will most likely see
the cross take on the yen offers around 97.58, a 1.382 Fib Extension of the
Jun-Nov 2004 CAD rally, with sustained momentum to the upside will most likely
see the CAD take on the yen defenses at 98..81, a 1.500 Fib Extension of the
Jun-Nov 2004 CAD rally. However a reversal from these levels will most likely
see the cross test the Loonie bids around 93.94, a level marked by the 20-day
SMA. Indicators remain in favor of the Canadian dollar traders with both MACD
and momentum indicator above the zero line, while overbought oscillators give
the yen longs a chance to take back previously lost territory.
CHF/JPY
Swiss Franc longs remained virtually unchanged as
the cross treaded sideways within an upward sloping channel. A decisive move by
the yen longs will most likely see the Swiss Franc bulls retreat and break below
the channel’s lower boundary with the initial move to the downside taking on
86.33, a 23.6 Fib of the 91.17-84.84 of the JPY rally. A sustained momentum will
most likely see the JPY bulls taking on the CHF defenses around 85.55, a
defensive line established by the July 21 daily low, which currently acts as a
gateway to the psychologically important 85.00 figure. Indicators favor the
Japanese yen bulls with both momentum indicator and MACD below the zero line,
with oversold Stochastic signaling a potential relief for the CHF longs.
NZD/JPY
New Zealand dollar bulls were pounded across the
board and the clash with the Japanese yen is no exception as Kiwi longs
retreated from the multi-year high at 78.63. However as long the as the cross
remains in an upward sloping channel, the NZD bulls still have a fighting chance
and an ability to test the recent highs, but a break below the channel’s lower
boundary will most likely see the NZDJPY head lower and test the New Zealand
dollar defenses around 76.11, a level marked by the 200-day SMA. A further move
to the upside will most likely see the yen bulls make their way toward the
psychically important 75.00 handle, a level that is being defended by the July 7
daily low at 75.16. Indicators support the Japanese with ADX falling below the
key 25 mark, while indicators diverge with MACD sloping down toward the zero
line and momentum indicator treading below the zero line, with neutral
oscillators giving either side a fighting chance.
Sam Shenker is a Technical Currency Analyst
for Forex Capital Markets (FXCM). Sam is the author of the Daily and Weekly
Technical Research reports at FXCM. His reports include: Daily Technicals,
Weekly Crosses and the Weekly Chart Pack. Prior to joining FXCM, Sam spent a
number of years on Wall St trading equities, equity derivatives and futures. He
also specialized in research and analysis of high yield bonds, corporate
bankruptcies, restructurings, reorganizations and venture capital.