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EURJPY and Dow Rally are Nearing an End
Tuesday, 07 August 2007 13:05:06 GMT  |  By Jamie Saettele, Technical Currency Strategist
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On June 8th, in our special report, “EURJPY and the Dow - Separated at Birth ,” we wrote that “it is hardly a coincidence the wave structure from a long term to a short perspective suggests that significant tops may be in place for the both EURJPY and the Dow.”  We were a bit early as the EURJPY and Dow did make new highs in July but the idea that tops were close to being put in place was correct.  The correlation still exists as the declines from the respective tops in EUR/JPY and the Dow continue to look like mirror images of each other. 

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The EURJPY top was put in at 168.94 on Friday, July 13th.  The DJIA (Dow) top was put in at 14021.38 on Tuesday, July 17th.  Both the EURJPY and Dow have now traced out clean 5 wave declines.  5 waves down indicates that at least one more 5 wave decline is likely to occur following a 3 wave countertrend rally.  Those rallies are unfolding now and in the latter stages.  An objective for the end of the countertrend rally for the EURJPY is 165.70, the 61.8% of 168.94-160.45.  The corresponding level for the Dow is at 13682.01.  We are not far from those levels, so look for the countertrend rally to end soon and for the next decline to send EURJPY down towards 150.00 (the 161.8% extension of the initial decline from 165.70 would be near 151.00).

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