Day trade
Trade view / 28 November 2014 at 8:30 GMT

JPY crosses in bullish formations

Analyst / PIA First
United Kingdom
Instrument: EURJPY
Price target:
Market price:
Background

USD – We got our USD pullback from the 261.8% extension level of 87.54 (from 88.51-88.14). There are three reasons why the USD looks set for another move lower:

1.    We have pulled back to the 61.8% Fibonacci level of 88.15.
2.    This is also a possible right shoulder in a larger Head and Shoulders formation (offering great risk/reward).
3.    An AB=CD formation has been completed.

For those looking for confirmation, a break of 88.02 (bespoke support) should send the index aggressively lower.

USD 
USD index
Source: Saxo Bank 

The JPY pairs all look bullish today so I will talk through chart formations and set-ups. I don’t think this is going to be a prolonged rally now (reasons explained below).

USDJPY – Yesterday's dip was bought into, resulting in the trend of lower highs being broken (118.13). A small correction lower this morning has also retested and rejected this breakout level. A 261.8% extension is located at 118.93, close to the previous high of 118.97. 

I think we might spike through this level then reject gains, moving lower to probably form a large bearish Head and Shoulders pattern (far too early to tell). I haven’t been triggered in this pair yet as our support comes in at 118.05.

Buying dips up to this area (118.90-119.00) is the play.

USDJPY
USDJPY
 Source: Saxo Bank


EURJPY – Mixed results for the last four days as we hold within a channel formation. This can also be seen as a bullish flag with a break of 147.40 confirming the outlook. We would then look to 148.14. I am buying dips this morning. It really needs to break the channel base to negate the view.

In the medium term, I expect further losses in this cross with the daily Evening Doji Star formation posted form the high.

Lots of European figures this morning so we can expect a bumpy ride.

EURJPY 
EURJPY
Source: Saxo Bank

GBPJPY – Mixed results for the last six days but, with the presence of higher daily lows, this has formed a bullish ascending triangle formation that has a bias to break higher (through 186.00). We have bespoke support at 185.40 and, with this being near the trend of higher lows, is an ideal place to go long. A break of 186.00 should take us to 186.86 (a 161.8% extension) and possibly beyond. A break of 185.00 and the outlook is broken.

GBPJPY
GBPJPY
 Source: Saxo Bank

AUDJPY – After hitting an intraday 261.8% extension level at 100.26 (from 102.81-101.84), the cross has posted little net change for the last two days in succession. This volatility is common in corrective patterns.

Although we have seen a three-wave pattern higher, this only reached the 38.2% pullback of 101.01 and is not seen as ample. We prefer to focus on the 101.36-48 area. This is the 50% Fibonacci and an AB=CD formation.

Over the medium term we turn bearish once more with the weekly chart likely to post a bearish Evening Doji Star pattern.

AUDJPY
AUDJPY
Source: Saxo Bank


Management and risk description

Parameters

Entry: Long at 147.13 (doubling up on a break of 147.40).

Stop: 146.70.

Target: 148.14.

Time horizon: 2-3 days.

— Edited by Oliver Morrison

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Disclaimer:
Non-independent investment research
This investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Saxo Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. » Read more
5y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
well they all played out (GBPJPY not really)... did anyone take them ??
5y
Corto Maltese Corto Maltese
Yes USDJPY and it was good. Still looking to go higher ?
5y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
sorry ...I always close out for the weekend
5y
net net
nice, thx
5y
vyacheslav111 vyacheslav111
your opinion on EUR/JPY now ?

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