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Trade view / 27 December 2012 at 7:18 GMT

USDJPY trend twilight

Individual trader
Poland

A large downtrend in USDJPY lasting at least 37 years is going to come to an end soon. A super-cycle impulse in the currency pair seems to be almost completed. Already, on November 15, 2012 I published a chart containing USDJPY analysis for the last four decades (shown again below).

.2012115 USDJPY monthly

The current chart does not differ much.

 20121226 USDJPY monthly

Both patterns – CT (contracting triangle) formed 1995-2007 as penultimate corrections before a final thrust lower and ED (ending diagonal) started in 2007 indicates there is no further downward continuation. The super-cycle impulse must be corrected. I assumed a target level of 74.61 being 61.80 percent of the last impulse in 1990-1995 preceding a CT. One could take 100 percent of the first impulse component 1-wave obtaining the same.

Here I re-labelled the last ED and went into more detail. In my opinion one more leg lower is missing.

20121226 USDJPY weekly  

ED's 5-wave must overlap with its 1-wave – i.e. it must cross over the 87.13 level. This will signal potential for the last leg down to complete the entire pattern. It will be a violent and dynamic move down followed by an abrupt reversal.

Caution: I do not know how far up USDJPY will go to reach reversal. Obviously it must not exceed 109.41 - i.e. not consume an entire 3-wave.

Therefore please abstain from trading for now - watch out till we have 87.13 and perhaps go short the last ZZf (zigzag family chain) to gain over min. 1,250 pips. A more careful trader could add a position after a correction or even wait it out to exclude it. I will try to publish an entry signal with trade management and risk assessment when I see a dynamic action down followed by a pullback.

The above forecast is clearly not a trade idea - it is a trade discouragement. The standard Saxo Bank disclaimer applies.

2y
JoaoST14 JoaoST14
I can agree with that in a technical point of view, but fundamentals are very strong for yen devalue. May doubt is what would trigger yen downwards move in USD/JPY? Abe would wake up on day and say that he is wrong in devaluing the yen?!
2y
Yogesh Sinha Yogesh Sinha
I think USDJPY is headed for 90 before anything happens to the pair.

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