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High Reward/Risk Breakout Trades on Yen Crosses

High Reward/Risk Breakout Trades on Yen Crosses

2012-02-03 21:07:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Euro / Japanese Yen

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_eurjpy.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

The EURJPY (and Yen crosses) have NOT accelerated lower and one must consider the possibility that important lows have formed. The low on the first of the month occurred right where one would expect in a larger bullish structure (former 4th wave area…near its low). As such, I am favoring a bullish bias as long as price is above 9924 (21 low). Upside levels of interest in the coming weeks are 10440 (100% extension) and 10570 (December high).

Bottom line: long, stop 9920, targets 10440, 10570

British Pound / Japanese Yen

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_gbpjpy.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

Recent commentary was “I’m on the lookout for formation of an important low (constructive pattern since the September low) in early February.” That low may be in place at 11958 (a drop below shifts focus to 11910). A bullish bias is valid against 11958 towards the confluence of the 100% extension at 12434 and November congestion (12400-12560).

Bottom line: long, stop 11955, target 12400-12500

Australian Dollar / Japanese Yen

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_audjpy.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

The AUDJPY dropped off at the end of January to satisfy its RSI extreme (75) but reversed on February 1st. Price is on the verge of taking out the January high and a push through would expose the October high (and intervention high) at 8395. A Fibonacci extension (100% of the rally from the October low comes in at 8668). Support is 8210 and the upside is favored as long as price is above 8055.

Bottom line: long on dip to 8210, stop 8055, target 8600 and 8800

Canadian Dollar / Japanese Yen

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_cadjpy.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

The CADJPY has broken higher and bulls are in control as long as price is above 7576. Objectives going forward are channel resistance, the October high at 7964 and a Fibonacci confluence at 8080/8100 (100% extension of rally from October low and 161.8% extension of rally from November low).

Bottom line: long, stop 7575, target 8080

Euro / Australian Dollar

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_euraud.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

The EURAUD has traded below 12227, which satisfies the minimum objective for wave 5 (from 12477). An objective remains 12000, which is psychologically significant as well as a measured level (breakout level - width of consolidation = 12227 – (12477-12227) = 11977). Resistance is now 12230/70 and a stop should be employed above 12320 (today’s high). Exceeding that level would indicate potential for a violent reversal.

Bottom line: short, stop 12320, target 12000

Euro / British Pound

Daily Bars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_eurgbp.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

This week’s weakness confirms my bias that “the EURGBP rally is a corrective 4th wave advance and a new low will be registered (under 8221).” Risk on shorts should be kept to 8410 (1/27 high) as a move above probably triggers a move to 8485. Levels of interest on the downside are the August and July 2010 lows at 8141 and 8066. Fibonacci extensions come in at 8103 and 8033.

Bottom line: short, stop 8415, target under 8220

Euro / Canadian Dollar

DailyBars

High_RewardRisk_Breakout_Trades_on_Yen_Crosses__body_eurcad.png, High Reward/Risk Breakout Trades on Yen Crosses

Prepared by Jamie Saettele, CMT

Keeping a familiar theme, expectations are for a EURCAD dip under 12874 (January low). A drop below there exposes the January 2011 low at 12776. Risk on shorts should be moved to today’s high (13209) as a move through there would shift focus to 13360 and 13426.

Bottom line: short, stop 13210, target below 12870

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

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

To be added to Jamie’s e-mail distribution list, send an e-mail with subject line "Distribution List" to jsaettele@dailyfx.com

Jamie is the author of Sentiment in the Forex Market.

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

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