Yen Pairs - January 2011 Overview

YEN PAIRS TABLE OF SUPPORTS AND RESISTANCES

at market close - December 31, 2010

USD/JPY

MONTHLY

Monthly Dollar-Yen has been ranging in a slightly ascending pattern from the middle line of a descending channel, after having reached the 127% Fibonacci extension from the previous swing low. The pair is still in a bearish overall trend but this bounce from the middle line could signal a return to the upper trend line to retest the broken support, and might even attempt a retest of the previous highs at around 94.00 where SMA34 ended in December.

WEEKLY

Weekly charts offer a bearish channel where price bounced from the upper trend line. I would expect the price to reach the lower trend line on a medium term scope, however we will have to watch the price action behavior as it moves around the lows, with a possibility of having a double bottom and reversal to a bullish scenario. In this case, the first target to be watched would be around psychological levels 84.00/85.00, where we have a strong area or resistance.

DAILY

2011 started by making a double bottom on the daily charts, with a strong retracement to the confluence of SMA100, SMA34 and middle line of Bollinger Bands. It is as of today trading above those moving averages, and I would favor a bullish view with the resistance at the recent highs as a first target area (approximatively 84.50), and as a second target a possible test of SMA200 which will possibly be conciding with the previous highs at around 85.80/86.00 at that moment. On a longer term view the bearish trend is still strong and I would expect a rejection at SMA200 with a turn back to the downside.

EUR/JPY

MONTHLY

Euro-Yen has been in a relatively tight consolidation in the last seven months of 2010 after the break of the descending triangle. I would expect a continuation to the downside towards the 127% and 138.2% Fibonacci extensions from the last long swing low of the second semester of  2008. Should the triangle formation break back to the upside, the target area would be around the SMA 100 and resistance area between 135.00 and 138.00.

WEEKLY

We can appreciate this long consolidation period in more detail on the weekly charts, and there is no clear direction by now however the trend is bearish and I would be targeting lower lows in extension, as described on the previous view. First target on weekly scope would be around 97.50 (125% Fibonacci extension from the swing low).

DAILY

The Euro-Yen had made a double bottom on the last days of December 2010 and retraced back up at the beginning of this week to meet the upper trend line of the descending channel and reached the middle line of Bollinger Bands. Price went back down then yesterday and we would have to watch today’s close which could end as a new double bottom on a higher level. At the present moment we have a symmetrical triangle formation with a bearish bias towards a downside extension to 106.50 (if previous double bottom support is broken) and psychological level 105.00 / 104.80 (161.8% Fibonacci extension from previous swing low). On the bullish side, another attempt to break SMA34 can be expected, which could give way to a further push to the SMA100 and upper Bollinger Bands. We have there a strong resistance between 111.20/112.00. If those highs are broken, next target is around SMA200 at 113.30/50 and a retest of previous highs at psychological level 115.00 can be expected.

GBP/JPY

MONTHLY

The Geppy is showing a similar candle formation as the Euro-Yen, a descending triangle with a slightly bearish consolidation, but with the difference that it hasn’t been broken yet. A break to the downside would lead to around 93.00/92.70 as the 127% Fibonacci extension from the previous swing low, then if the bearish trend is to continue, we can expect a fall near psychological level 82.00. On the bullish side, targets are the middle line of the Bollinger Bands at around 141.00, then the SMA34 and 38.2% Fibonacci retracement of the downmove, and further targets at the level of the SMA100 and previous area of support to retest the break (approximatively 192.50).

WEEKLY

Same as for the Euro-Yen, the Geppy is flat on weekly charts, I would recommend to use preferently the monthly charts for a longer term view, or the daily patterns for a medium and shorter term projections. If the lows are broken, my first target would be at around 94.50/95.00 (125-127% Fibonacci extension) and on the upside the price will probably attempt a break of SMA100 and further retest of the highs near 160.00 (38.2% or even 50% retracement of the previous swing low). 

DAILY

December 2010 ended on a double bottom which was followed this week by a retracement to retest the broken area (129.50/130.00). It is presently contained by the upper trend line of the descending channel and the middle line of the Bollinger Bands. Today’s close will give us a clearer view of this pair for next week, but as price action has been going, I would expect a break to the upside and attempt to go back to December highs at 133.00. If the channel holds, I would favor a retest of the lows at 125.60/50 and a further fall to 123.70/50 if the support is broken.