picking tops and bottoms

Australian Dollar / Yen Setting Up for Sharp Advance

Friday, 19 December 2008 18:28:20 GMT  |  Jamie Saettele, Senior Currency Strategist

-AUDJPY bounces from all-time low (2000 low)
-Breakout opportunity on rally above .6362

The all-time low (formerly in 2000) was pierced in October and the AUDJPY has held that low since.  Monthly RSI has moved into oversold and momentum is strong to the downside.  However, on shorter term charts, there is evidence of at least a temporary turn.

On the daily, we see that there are 3 waves down from October 2007 high at 107.93.  The final leg of wave 4 may exceed 70.58.  If wave 4 is unfolding as a triangle, then the advance will fall short of 70.58 and resistance would be in the 69.50-72.10 zone.  Price ideally remains above 56.83.

Since momentum is down strongly, it is wise to adopt a breakout strategy in order to guard against a resumption in the downtrend.  A rally above .6362 (December 18th high) would indicate to me that the path of least resistance is up.  

 

 

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals  every weekday morning (9 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.

 

Contact at jsaettele@dailyfx.com

 

 

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