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FOREX Analysis: How to Trade EUR/JPY on NFP

FOREX Analysis: How to Trade EUR/JPY on NFP

Jamie Saettele, CMT, Sr. Technical Strategist

Euro / Japanese Yen

240 Minute Bars

FOREX_Analysis_How_to_Trade_EURJPY_on_NFP_body_EURJPY.png, FOREX Analysis: How to Trade EUR/JPY on NFP

Prepared by Jamie Saettele, CMT

FOREX Technical Analysis Observations: The EURJPY broke Monday’s low today, leaving us with a potentially important top in place at 10795. I’m unsure of the structure from the July low but the rally from 10032 (November low) can be counted as a completed impulse. As always, implications following a 5 wave advance are for a 3 wave decline towards the terminus of wave 4 of one less degree. That level is 10527.

FOREX Trading: The USDJPY triangle setup suggests strength in the Yen crosses before additional downside. If the USDJPY triangle interpretation is correct, then the bullish thrust and reversal will probably occur on the NFP release (that means that USDJPY would spike above 8283 and then reverse lower…violently). In other words, I’ll be looking for a spike higher in EURJPY in order to return short (I was stopped out last week at 10720). Estimated resistance is 10713/48.

Euro / Austraian Dollar

Daily Bars

FOREX_Analysis_How_to_Trade_EURJPY_on_NFP_body_euraud.png, FOREX Analysis: How to Trade EUR/JPY on NFP

Prepared by Jamie Saettele, CMT

FOREX Technical Analysis Observations: A bearish JS Thrust formed today for the first time since 7/5. Several days of consolidation are common following a thrust day. Support is defined by the 61.8% retracement of the rally from 12158 at 1205 and the 11/28 low at 12335. Resistance is expected at 12400/26. Structurally, the advance from 12158 may compose 3 waves (corrective) with wave C as a diagonal. Waves A and C are close to equal (difference of 50 pips).

FOREX Trading: I’m in the sell rallies camp but for risk purposes would only do so above 12420 with a stop above today’s high. Typically a decent swing trade candidate, focus is on the November low. Active traders of this pair may wish to trade between 12305/34 and 12400/26.

Euro / British Pound

Daily Bars

FOREX_Analysis_How_to_Trade_EURJPY_on_NFP_body_EURGBP.png, FOREX Analysis: How to Trade EUR/JPY on NFP

Prepared by Jamie Saettele, CMT

FOREX Technical Analysis Observations: The reversal appears to have finally materialized. The last several updates noted that “it’s important to realize that the EURGBP rally from 7751 is probably a leading diagonal for several reasons. Leading diagonals are motive waves that occur as wave 1 or A but the subsequent 2nd or B wave often retraces a significant amount of the leading diagonal.” If wave C is underway, then we’ll probably see a print below 7960 in December. Near term support is to be expected at the 11/27 low. A bounce off of there likely offers a short opportunity next week.

FOREX Trading: Near term support is to be expected at the 11/27 low. A bounce off of there likely offers a short opportunity next week.

Australian Dollar / New Zealand Dollar

Daily Bars

FOREX_Analysis_How_to_Trade_EURJPY_on_NFP_body_audnzd.png, FOREX Analysis: How to Trade EUR/JPY on NFP

Prepared by Jamie Saettele, CMT

FOREX Technical Analysis Observations: The AUDNZD rally from 12370 provides a textbook example of a zigzag correction. Yesterday’s break of corrective channel support strongly suggests that price is heading for a break of 12370…eventually. 12524/46 is probably support in the interim.

FOREX Trading: There is a short here with the most aggressive bearish scenario valid as long as price is below 12730. 12630 is resistance. I don’t trade AUDNZD though. Rather, my interpretation of the cross helps in deciding whether or not to express an opinion in AUDUSD or NZDUSD. The current interpretation suggests that I should be on the lookout for an AUDUSD top.

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

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Contact Jamie Saettele at 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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