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EURJPY Short Term Reversal Opportunity

EURJPY Short Term Reversal Opportunity

2011-09-07 15:39:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Euro / Japanese Yen

Daily Candles

Crosses090711_body_eurjpy.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

The EURJPY traded at its lowest level since March yesterday and traced out a key reversal. A narrow range bar (smallest in 20 days) unfolded today. This combination (of key reversal and narrow range bar) presents a high reward/risk reversal opportunity against yesterday’s low (10783). It is worth noting that key reversals marked the May and August lows and March high. The May reversal did occur following a failed reversal however. Resistance comes in at 11000 (Tuesday high and 20 day average).

British Pound / Japanese Yen

Daily Bars

Crosses090711_body_gbpjpy.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

The GBPJPY also made a small range bar today a day after forming a doji. Trading at its lowest since March, the doji / narrow range bar combination warn of at least a temporary bounce. Dropping below Tuesday’s low would negate the constructive view and shift focus to the 2009 low of 11880.

Canadian Dollar / Japanese Yen

DailyBars

Crosses090711_body_cadjpy.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

The CADJPY is basing after failing to break down in recent days. Price has remained above the 8/11 low which is quite remarkable considering the volatility in stock markets since that time. In any case, the series of higher highs and higher lows since the August low warrants reversal consideration. The trendline drawn off of the July and August highs defines the trend.

Australian Dollar / Japanese Yen

Daily Bars

Crosses090711_body_audjpy.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

The AUDJPY is in ‘no man’s land’ at the moment. Yesterday’s reversal has given way to more gains today and brought forth the potential for a additional strength into the trendline that extends off of the July and August highs. This level is reinforced by a July pivot low at 8314, 100% extension of the rally from the August low at 8346, and short term channel. One would think that if reached, that cluster would provide strong resistance.

Euro / Australian Dollar

300 MinuteBars

Crosses090711_body_euraud.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

I wrote Friday that “the EURAUD has reached 13263 but short term structure does not look complete. Small waves 4 and 5 are expected to unfold. Expect a bounce into 13400 in wave 4 of c before one final low gives way to a reversal.” The EURAUD popped higher to 13467 before reversing and dropping to a new low. Even if the larger trend is down then a correction back into 13466 would is likely in a 4th wave. Look higher. 13129 is support if reached.

Euro / British Pound

Daily Bars

Crosses090711_body_eurgbp.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

I maintain that a triangle is unfolding. “The EURGBP has traded sideways since the May high and a triangle may be forming. 3 waves can be counted thus far (down from the May high, up from the May low, and down from the July high). The current rally would compose wave D of the triangle and resistance is expected near the 6/10 high of 8975. If a triangle is unfolding, then expect consolidation for at least a month more before a break above 9082 (terminal thrust).”

Euro / Canadian Dollar

300 MinuteBars

Crosses090711_body_eurcad.png, EURJPY Short Term Reversal Opportunity

Prepared by Jamie Saettele, CMT

To review, the rally from 13408 is in 5 waves, which suggests the beginning of a larger bull move. Of course, a 5 wave rally is followed by a 3 wave correction. That correction is underway now. In fact, the first wave (wave A) of the correction is probably about complete (see 5 waves down). Additional support comes in at the 61.8% retracement of the rally from 13408, at 13853. A b wave rally is expected to begin soon and unfold towards 14105.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Monday), technical analysis of currency crosseson Wednesday and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forex Stream. A graduate of Bucknell University, he holds the Chartered Market Technician (CMT) designation from the Market Technician Association. He is the author of Sentiment in the Forex Market. Send requests to receive his reports via email to jsaettele@dailyfx.com.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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