Medium term
Trade view / 08 July 2016 at 7:59 GMT

Medium-term contrarian outlook for USDJPY

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

USD Index – We are in consolidation mode ahead of the much anticipated nonfarm payrolls figures today. Our medium- and long-term bias remains bullish but it is always a bit of coin flip going into NFP. 

One interesting pair, and definitely a contrarian outlook at the moment, is USDJPY. Longer timeframes would highlight that we could reverse from current levels. The main issue with this view is the fact that EURJPY and AUDJPY are still bearish, but only after corrective bounces. I think that this view would be more on euro and Australian dollar weakness than yen strength.  

Breaking down the timeframes:

Monthly – We have moved down to the previous support area (see highlighted circles) and spiked through the 50% pullback level of 100.57 (from 75.30-125.85). This is also a reverse trendline support from the 1998 and 2007 peaks. If we hold here it could possibly form a right shoulder of a bullish reverse Head and Shoulders pattern. Far too early to tell.
USDJPY M
 Source: Saxo Bank
 

Weekly – Probably the most important timeframes for this contrarian outlook. We have completed a bearish five-wave pattern (Elliott Wave) at the 261.8% extension level of 100.44. This dictates that we should at least get a correction to the upside. Last week posted an Inside Harami candle highlighting investor indecision at these levels.
USDJPY W
Source: Saxo Bank  

Daily – Posted nine inside soldiers up to now as choppy price action continues. The main upside barrier for this pair is seen at 111.44. This has been pivotal on four occasion this year and makes a good medium-term upside target. 
USDJPY D
 Source: Saxo Bank

DeMark – It should be noted that other yen crosses are showing these patterns and DeMark counts:

AUDJPY – At the 161.8% extension level of 74.61 (from 105.37-86.36) while posting a DeMark exhaustion 13 on the daily chart. 
AUDJPY W
 Source: Saxo Bank

EURJPY – At a 161.8% extension level of 111.21 (from 149.54-125.82) and an intraday 261.8% extension of 110.96 (from 114.78-113.32). DeMark exhaustion on two hours.
EURJPY M
 Source: Saxo Bank

GBPJPY – Posting a 12 count this week so close to exhaustion. A 423.6% extension level is seen at 125.26 (from 195.92-179.24). 

USDJPY – Exhaustion 13 count on two hours with a Doji bottom.

We need to see some follow through buying from current levels with a break of the trend (101.05) needed. With a stop below Wednesday's low (100.20), this makes a very favourable medium-term call (approximately 9/1 risk against reward) even if we are counter trending. We would recommend half size. 

Management and risk description

Parameters

Entry: Buy a break of 101.20

Stop:100.20

Target: 111.40 area 

Time horizon: medium term 2-4 weeks

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
1y
Dj TinTin Dj TinTin
Hi Ian what if the US payroll data is strong today will the bulls be looking short? ?
1y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
It is a huge day for figures (and the USD). I think it will outline the outlook for the next month or two. I am a strong USD bull. However, I can honestly say that I have rarely made money on the actual release day. Just trying to trade a long term view
1y
sam wightman sam wightman
That`s a cracker !
( will the Bulls be looking short )
1y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
thanks Sam .... we need good figures but we will see
1y
assi assi
Hi Ian, do you think to sell AUDJPY is agood idea...??
1y
assi assi
Hi Ian, please see attach, enteresting chart....you think so ??
1y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Hi Assi ..... no. It is in a corrective phase higher.
1y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
It is all about timing !!!!

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail