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How to Trade a Possible USD/JPY Trend Extension

How to Trade a Possible USD/JPY Trend Extension

2013-12-06 22:02:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:
  • USDJPY ‘3 point triangle’ setup is possible
  • AUDUSD may test .9167-.9203 before backing off
  • USDCAD and USDNOK breakouts to end the year?

Friday’s DailyFX Plus webinar highlights developments and levels to watch in the Europe/Commodity FX pairs. (video is titled JamieTrading12062013).

Subscribe to Jamie Saettele's distribution list in order to receive FX trading strategy delivered to your inbox.

Jamie is the author of Sentiment in the Forex Market.

USD/JPY

Hourly

How_to_Trade_a_Possible_USDJPY_Trend_Extension__body_Picture_5.png, How to Trade a Possible USD/JPY Trend Extension

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-The USDJPY decline from 103.37 is corrective and most of the drop has already been retraced.

-One of my favorite ‘trend extension’ setups is the construction of a 3 point triangle (contracting boundaries but with just 3 legs). A drop from before the high that finds support before 101.61 could satisfy requirements.

-A bullish objective of 105.12 is derived by calculating the measured move from the 103.37-101.61 dip. A close from Oct 2008 remains uncovered at 105.30.

Trading Strategy: Looking to re-enter longs (trailed out at 102.20 this week). 101.80-102.20 is estimated support.

AUD/USD

4Hour

How_to_Trade_a_Possible_USDJPY_Trend_Extension__body_Picture_4.png, How to Trade a Possible USD/JPY Trend Extension

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-AUDUSD formed an outside day reversal on Friday.

-The drop to a new low appears to have completed 5 waves down from the 12/2 high. A complete retracement of that decline would return price to the ‘former 4th wave’ at .9167. In general, .9167-.9203 is resistance.

-A re-test of the breakdown level from the head and shoulders top at .9267 is possible as well.

Trading Strategy: Larger trend is still down but I am flat at the moment after being trailed out of a month long short position at .9080. Short term support is estimated at .9065. .9200 may be the level to think about turning bearish again.

USD/NOK

Weekly

How_to_Trade_a_Possible_USDJPY_Trend_Extension__body_Picture_3.png, How to Trade a Possible USD/JPY Trend Extension

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-USDNOK broke above a 3 year trendline in June. The topside of that line was tested as support in September (the test was on the ‘no-taper’ spike).

-Recently broken resistance at 6.0730 (10/10 high) served as support throughout Nov.

-This is the 3rd week this year that price is attempting a break above the 2012 high. Measured moves on a break above 6.2643 are 6.7963 and 6.9115. The 2010 high is at 6.7273. 6.10 is estimated support within the range.

Trading Strategy: I am long with a 6.10 stop.

USD/CAD

Weekly

How_to_Trade_a_Possible_USDJPY_Trend_Extension__body_Picture_2.png, How to Trade a Possible USD/JPY Trend Extension

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-USDCAD traded above 1.0700 this week for the first time since May 2010 (after the ‘flash crash’).

-The line that extends off of the 10/22 and 11/18 lows may come into play as support. That line is at 1.0530 on Monday and about 1.0560 next Friday. Recently broken highs of 1.0608 and 1.0567 are also of note.

-Measured objectives from recently broken ranges are 1.1035 and 1.1681. These levels are roughly in line with the July 2009 and Aug 2009 highs at 1.1723 and 1.1125. The May 2010 high at 1.0854 is of note.

Trading Strategy: A substantial bull move may be underway. 1.0567-1.0608 is support. I am looking for a low in that zone.

USD/MXN

Daily

How_to_Trade_a_Possible_USDJPY_Trend_Extension__body_Picture_1.png, How to Trade a Possible USD/JPY Trend Extension

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-Tis a tale of trendlines in USDMXN. On Tuesday, price traded into and reversed from the resistance line that originates from the 2012 high. On Friday, the rate traded into a well-defined support line that originates from the Jul low.

Trading Strategy: Just know that the market is coiled for a large move. Price needs to stabilize before entertaining longs.

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

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

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

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