The Yen crosses are vulnerable to a period of corrective / consolidation behavior before heading lower.
The EURJPY is testing 150 for the 4th time this month. A break is expected sooner or later. Beware of a triangle or flat though. In this case, price would move sharply higher from near current price before turning lower. Longer term potential support is former resistance near 140.
The GBPJPY is in the exact same position as the EURJPY. Lower prices are expected eventually but a larger correction is possible in the event that a triangle or flat is unfolding.
The pattern in the CADJPY remains unclear to say the least. A reverse head and shoulders remains possible, which is bullish. Bearish evidence includes the 200 day SMA, which is sloping down and the series of lower highs since late 2007. Given the potential for upward corrections in the other Yen crosses and the outlook for CAD strength, it is possible that the break will occur to the upside.
The AUDJPY decline from near 104 consists of 2 equal legs. Although the longer term trend is likely down, a larger correction from 85 is very much possible. A triangle or flat could be unfolding from there.
We have focused on potential bearish objectives in recent weeks for the thrust from the large consolidation. We have mentioned the “June 2004 low near 67.50 and the 61.8% extension of A at 68.21.” There is likely additional downside to one of the there levels or lower but beware of a continued correction from 69.88 in the form of a triangle or flat.
Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published 6-7 pm EST), Daily Technicals every weekday morning (9-10 am EST), COT analysis (published Monday mornings), and analysis of currency crosses throughout the week. He is also the author of Sentiment in the Forex Market.
