Forex Technical Update
If you have been following the currency for the past 3-4 months, you would not have missed the parabolic rise in Japanese yen pairs. There has not been any significant corrections and most consolidations have been either slightly bearish or sideways to bullish in structure. As we get into the 1/15 session, price action shows another attempt at topping. Just remember before you go chasing this top, that there will be a long way to retrace if there is one, so don’t jump in for haste. Of course, there could be that chance it is a top, but even if that is so, the risk of being conservative and losing out on a small part of a potentially big move is minor compared to the risk of getting chopped up by loading up shorts on JPY-crosses.
The other consideration is to wait for a correction or dip to go long on. But where? I won’t have the answer now. I usually have some guide zones but mostly watch price action, though at times, the market will miss these guide zone and slip back into the trend, which is bullish in the case of Japanese Yen crosses. Here’s a look at some of those crosses trying to top in the early 1/15 Asian session.
These images of JPY-crosses already show the initial topping attempt retreat. The USD/JPY, EUR/JPY, and AUD/JPY all completed double tops, while the GBP/JPY is trying to complete its head and shoulders. It is really up in the air in my opinion. Decisions made here should not be in haste, and if any, should be small positions, You can always add later when these topping attempts are complete.
A push back above 89.10 makes the double top suspect, and a push above 89.35 (middle of the double top), could be a sign that the bulls have successfully fought off the topping attempt. Continuation to “chew up the tail” and fall below 88.57, 38.2% retracement opens up the 50-61.8% retracement zone of the rally we had since last Thursday (1/8). It’s a pretty big zone, I would be watching for more clues here (87.90-88.25).
Also showing possible double top. Clearing below 118.55 opens up 38.2% retracement which is also a previous support pivot, at 117.60. Might also be testing a rising trendline support. Failure to hold below 119.50, could revive the bullish continuation outlook.
Will the head and shoulders form? If it does, it also breaks below a rising trendline. We could be watching the 141.43-142.71 (50%-61.8% retracement) area for support of the latest bullish swing from last Thursday. Push back above the right shoulder at 144.25 could be a sign of failed topping, and could be an early sign of bullish continuation.
A double top has formed, and the 93.73 pivot is cracked. For this pair, the 50-61.8% retracement zone is 92.48-93.90. A pullback above 94.30 could be an early sign of a failed double top.
The success and failure of these pairs’ topping attempt should likely be in sync. Maybe not down to the minute, but the eventual result should be linked because the Japanese Yen’s recent rally has caught everybody’s eyes.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.