USDJPY Trading Opportunities
Posted 09-09-2010 at 10:57 AM by DailyFX
USDJPY Trading Opportunities
Potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.
Monthly USDJPY Bars
Prepared by Jamie Saettele
For years, I’ve focused on the impulsive nature of the USDJPY decline since the 1970s and expectations have been for a drop below the all-time low of 7975 (1995) in a 5th wave. With just 400 pips to go until that level, it would be foolish to alter this bias now. What’s more, it’s likely that a 5th wave break from a 12 year 4th wave triangle extends (70 or lower?).
Weekly USDJPY Bars
Prepared by Jamie Saettele
The problem with the decline from the 2007 wave 4 high is that it’s a mess. 5th waves, especially after significant moves in the prior 3rd wave (see previous chart) sometimes unfold as ending diagonals. That is, the decline is overlapping and consisting of 3 wave movements. Such is the case here. There is not a clear count from the 2007 high yet…so it is unlikely that the decline is complete (if you can’t count, then it’s not over). A long term trendline has held as resistance and the long term trend is down against 9500.
Daily USDJPY Bars
Prepared by Jamie Saettele
Zooming in to the daily, we see that RSI divergence warns of a near term reversal. There are also intermarket divergences as the only Yen crosses below their 2008 lows are the USDJPY and EURJPY (the GBPJPY, AUDJPY, NZDJPY, and CADJPY are above their 2008 lows). These divergences WARN of a reversal. Trading above 8525 is required for confirmation.
In summary, potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.
Potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.
Monthly USDJPY Bars
Prepared by Jamie Saettele
For years, I’ve focused on the impulsive nature of the USDJPY decline since the 1970s and expectations have been for a drop below the all-time low of 7975 (1995) in a 5th wave. With just 400 pips to go until that level, it would be foolish to alter this bias now. What’s more, it’s likely that a 5th wave break from a 12 year 4th wave triangle extends (70 or lower?).
Weekly USDJPY Bars
Prepared by Jamie Saettele
The problem with the decline from the 2007 wave 4 high is that it’s a mess. 5th waves, especially after significant moves in the prior 3rd wave (see previous chart) sometimes unfold as ending diagonals. That is, the decline is overlapping and consisting of 3 wave movements. Such is the case here. There is not a clear count from the 2007 high yet…so it is unlikely that the decline is complete (if you can’t count, then it’s not over). A long term trendline has held as resistance and the long term trend is down against 9500.
Daily USDJPY Bars
Prepared by Jamie Saettele
Zooming in to the daily, we see that RSI divergence warns of a near term reversal. There are also intermarket divergences as the only Yen crosses below their 2008 lows are the USDJPY and EURJPY (the GBPJPY, AUDJPY, NZDJPY, and CADJPY are above their 2008 lows). These divergences WARN of a reversal. Trading above 8525 is required for confirmation.
In summary, potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.
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