Yen 110 & Aussie 0.98?!

Dear Readers,

Welcome back to today’s blog!

Today’s article will focus on the Australian Dollar versus the U.S. Dollar.

Some readers might be wondering:
“why on earth would anyone want to even look at the Aussie right now?”

And yes, that is a very valid question. This currency pair has definitely been very choppy for several months in a row.

The choppiness had some slight upward trend motion, but overall the speed at which the Aussie climbed was comparable to a snail crossing the finish line.

In that slow and tedious up move there was really no decent space for a swing or position trader to get a great R:R. Contrary to a currency like the Yen and all of its pairs.

We have been following on the AUSUSD regularly of course:
a) the power of the week analysis
b) the hottest news on Aussie

And today might signal a change. Maybe, just maybe. We want to be extra careful on saying something that risky as predicting the end of a correction as they can take longer than traders think!

FEB 6 AUDUSD DAY

But if we look at the day chart…. We see a pretty decent bearish day candle punching through the uptrend support line.

Could this be signaling a down move? Yes it might. But because the Aussie is already making 5 waves down, we are a bit cautious with that conclusion as a 3 wave corrective could take place before we get the bigger fall. Once that has happened, it could spell a down side to the bottom of the wedge.

In any case, it might be a good heads up for you to start to keep an eye open on that Aussie… it might, just might be ready to wake up again!

The EURUSD and GBPUSD have had quiet days today with price just bouncing back and forth between the 4 hour tops and bottoms. Despite the EURUSD strong rebound at first, the likelihood of further downside has increased when price lost momentum during the last 24 hours. EURUSD has key support levels at 1.35 and 1.3450. Key resistance at 1.36 and 1.3650.

 

Another pair to look at is the USDJPY. The huge uptrend has reached amazing heights, but could it keep going?

Of course, everyone would love a piece of that action!

FEB 6 USDJPY WEEK

But it’s always scary when the trend has been going for 1,500+ pips.

Before we we take a look, don’t forget to read this article on the latest news in Japan. 

If we analyze the week chart and we place a Fibonacci retracement level on the last swing high swing low from top to bottom, then we can make the following conclusions:

–          We are at 382 Fibonacci retracement of the down move

–          We are 100 pips away from the next major resistance top at the 95 area

–          If wave Fib the third wave, then we see a retracement down the 786 Fib and the -1.272 target is close by at 94.50

–          It looks like we are making 5 waves to the upside. If so, then more upside is coming our way, but the question is when

Conclusion from the week chart:

The 94-95 could be a resistance level. It is a very wearisome and difficult job to forecast the end of such a bullish move but I am going to make an attempt based on those elements in the week chart.

Mind you though, this is not something I am going to trade. It does not fit in my trading plan to trade this information.

What I do consider very interesting for trading is when the USDJPY would continue it’s up move after a decent retrace.

On the day chart we see that:

a)      This could be either the end of wave 5 and the first impulse will finish at +/- 94.50 level.

b)      Or this is wave 5 of wave 3 and we have a wave 4 + 5 left. In that case the first impulse could end at 100.

 

FEB 6 USDJPY DAY

In case of A I gladly rejoin the trend upwards once we break through the 95 level for another 500 pip reward. At that level we can see a 500 week Fib plus of course the psychological 100 number. Those trades will be made on a 4 hour chart in my case.

In case of B I would expect a down move to the 382 Fib at round 87 before moving again for another leg up.

In all cases it is possible that the current forecast can change, depending on new price action information.

Ultimately, I do think that the USDJPY can make it all the way up to the 786 retracement Fib of the weekly down move at 113.70. I think I hear you scratch your head, but yes it is possible.

The USDJPY made a huge impulsive move up. These type of movements really are very special and only happen every so often, most often a big move like this happens only once in a year.

In that regard my analysis says that this up move on the USDJPY will most likely finish sometime in April or May this year.

I wish you good trading! Oh and don’t forget to let me know what you want to look at tmrw! Thanks for sharing this article as well 🙂

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