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How to Trade Yen Crosses in Early Stages of Bear Trends

By , Sr. Technical Strategist
05 April 2012 19:01 GMT

Euro / Japanese Yen

240 Minute Bars

How_to_Trade_Yen_Crosses_in_Early_Stages_of_Bear_Trends_body_eurjpy.png, How to Trade Yen Crosses in Early Stages of Bear Trends

Prepared by Jamie Saettele, CMT

“Reward/risk warrants a bearish stance in anticipation of a break under 10848 and continuation towards 10740 and the March low at 10564.” Price broke 10740 today before finding support at 10688, a seemingly arbitrary level. Declines in the Yen crosses tend to be punctuated by sharp countertrend rallies, especially early in the cycle. With this in mind, resistance comes in at 10850. The March low is the next bearish objective at 10564.

Bottom line (next 5 days): sideways/lower

British Pound / Japanese Yen

240 Minute Bars

How_to_Trade_Yen_Crosses_in_Early_Stages_of_Bear_Trends_body_gbpjpy.png, How to Trade Yen Crosses in Early Stages of Bear Trends

Prepared by Jamie Saettele, CMT

“Reward/risk at this point warrants a bearish stance in anticipation of a break under 13000 and continuation towards 12815 and the March low at 12654.” Price did trade below 13000 today but resistance from late February and March is acting as support. Declines in the Yen crosses tend to be punctuated by sharp countertrend rallies, especially early in the cycle. With this in mind, resistance comes in at 13075 and 13135. March pivot lows at 12817 and 12654 (March low) are bearish objectives.

Bottom line (next 5 days): sideways/lower

Australian Dollar / Japanese Yen

Weekly Bars

How_to_Trade_Yen_Crosses_in_Early_Stages_of_Bear_Trends_body_audjpy.png, How to Trade Yen Crosses in Early Stages of Bear Trends

Prepared by Jamie Saettele, CMT

The AUDJPY has tested and bounced from the 10/31/11 (intervention high) just under 8400. The circled areas are the tops from 2010 (in April) and 2011 (also in April). More than any other Yen cross, the chart above illustrates the oscillations in risk sentiment that have taken place over the last 3 years. In effect a perfect range, the next support is 8285, which intersects with a trendline at the end of this month. Initial resistance has been reached but extends to 8575.

Bottom line (next 5 days): sideways/lower

Euro / Canadian Dollar

Weekly Bars

How_to_Trade_Yen_Crosses_in_Early_Stages_of_Bear_Trends_body_eurcad.png, How to Trade Yen Crosses in Early Stages of Bear Trends

Prepared by Jamie Saettele, CMT

I wrote Tuesday that “the sideways pattern that has unfolded since the January low may be complete. The rally into the January high failed at a level that was support throughout 2011 and the weak beginning to April provides a clear pivot (13333). Don’t be surprised to see some corrective action (strength) following a 200 + pip decline the last 2 days.” The EURCAD could only muster sideways trading yesterday before today’s plunge. The January low (12874) is in sight and a break would target the January 2011 (and all of 2011) low at 12776 and then the 2010 (from June) low at 12449. Resistance is 12986 and 13025.

Bottom line (next 5 days): sideways/lower

Euro / Australian Dollar

Daily Bars

How_to_Trade_Yen_Crosses_in_Early_Stages_of_Bear_Trends_body_euraud.png, How to Trade Yen Crosses in Early Stages of Bear Trends

Prepared by Jamie Saettele, CMT

I wrote Tuesday that “the EURAUD rally has paused in recent days and the break of today’s outside day should trigger the next short term move…a drop below 12740 would present an opportunity to align with the larger bull trend. Supports are 12710 and 12625.” 12710 gave way easily and focus is on 12620 (2/27 high and 3/26 low and 20 day average). Expect strong support there in concert with the AUDUSD at 10330/50.

Bottom line (next 5 days): sideways/higher

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow me on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

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05 April 2012 19:01 GMT