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USDJPY Breaks Out as Stocks Struggle at Topping Zone

USDJPY Breaks Out as Stocks Struggle at Topping Zone

2012-06-21 13:23:00
Jamie Saettele, CMT, Sr. Technical Strategist
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Afternoon Technicals (all charts)

Other TA (crosses, COT, etc.)

“THE MARKET(S)” a.k.a. “RISK” SNAPSHOT - 60 Minute Closes

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_all.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

SPX 500 – Daily Bars

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_SPY.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

We are just 1 day away from the beginning of our projected topping window. “The decline from the April high consumed 43 days…corrective rallies tend to consume 1/3 – 1/2 of the time that the decline did. In other words, one would expect the rally from the low to take roughly 14 to 21 days. Projected from the 6/4 low, we get possible topping dates on 6/22 and 7/3.”

SPY ETF – Daily Candles

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_SPY_1.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

The rally from the low in SPY has retraced nearly 61.8% of the decline from the April top. At this point, keep an eye on the channel that defines the advance from the 6/4 low for support and resistance. A drop below Monday’s low at 133.28 would suggest that the top is in place. Until then, respect upside potential towards the gap left open in early May as high as 138.99 (intersects channel resistance tomorrow). It’s worth noting that RSI is pressing against 60, which often serves as resistance in a bear trend. The DJIA and S&P 500 Index have already reached their 61.8% retracements. A look at the intraday patterns suggests that yesterday’s dip may have composed wave 4 of C (or part of wave of C). 4th waves are often tricky (complex) as they occur before the final push that results in a reversal. A drop of about 100 Dow points from yesterday’s close would result in a test of the 38.2% retracement of the 3rd wave rally and intraday 6/18 pivot low just under 12730 (see next chart).

DJIA – 30 Minute Bars

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_dow.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

Australian Dollar Futures – 240 Minute Bars

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_AUD.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

As mentioned last night on Twitter (@JamieSaettele), volume on Australian Dollar futures (CME) at the top was the highest since price bottomed on 6/1. Going back further, the only time that volume was this high for a 4 hour time period was at the low on 10/4/11 and high (which resulted in a short term top that took time to develop) on 11/30. Volume of this magnitude is indicative of a ‘washout’.

USDJPY – 240 Minute Bars

USDJPY_Breaks_Out_as_Stocks_Struggle_at_Topping_Zone_body_usdjpy.png, USDJPY Breaks Out as Stocks Struggle at Topping Zone

Prepared by Jamie Saettele, CMT

The next USDJPY bull leg appears to be underway. Risk on any longs can be moved to 7860(from 7765) and 7980 is now support. We are at what may be interim resistance but the first real test will come near 8075.

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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