Yen Pairs Monthly Overview and Weekly Update - March 04/08 close

USDJPY

Monthly Overview - March 2011

We have another month ending on a hammer candle for the Dollar-Yen, sitting above the lows and inside a falling wedge that is contained by the descending channel. A further fall in extension to the 127% Fibonacci is still possible (76.40), or at least down to the bottom line of the wedge, around 78.00. However my views are that a correction is due and I would target the upper line of the wedge and middle line of the Bollinger bands at around 87.00/60, just above a resistance area between 84.00 and 86.00, with next point (after a break of the upper trend line) at the level of the previous highs at around 95.00/50 (near 50% Fibonacci retracement on the swing low).

USDJPY Weekly Update at March 04 close

Still inside a symmetrical triangle on weekly charts and a slightly ascending channel on daily, the Dollar-Yen had a bullish week which ended up in a strong rejection of psychological level 83.00, giving back about half of the gains for the week, and forming a daily pin bar that closed below the confluence of SMA34, SMA100 and the middle line of the Bollinger bands. From a bearish point of view, we could have a retest of the lows around 81.15/81.00 with a continuation towards 80.40/80.00 if the level doesn’t hold. However the week has started bullish again and as of today we are about to revisit last Friday’s highs, which if broken would lead us to the top of the channel at around 84.00.

EURJPY

Monthly Overview - March 2011

February was a tight-ranging month for the Euro-Yen, which ended with a spinning top candle just above the middle area of a falling wedge. This pair seems to be building a bottom and I would favor a correction targeting the upper line of the wedge and middle Bollinger band as well as 38.2% Fibonacci retracement at around 118.00/120.00. If this level breaks to the upside, the next area to watch would be 125.00/128.00 (previous highs) with a particular preference for level 126.00/20 which is also the 61.8% Fibonacci retracement and near the SMA34.

Weekly charts show this pair did a bullish run to the highs and ended on a possible double top, and on daily we can better see the strong rejection from level 116.00 leaving a pin bar candle to be confirmed on Monday, which it effectively did and thus we could expect a run back down to the bottom of the ascending channel, at SMA34 level with a 80% retracement from the highs (112.80/113.00). A break of this level would lead to a retest of the lows at around 112.00/111.90. My views are totally bearish on this pair but do not neglect an eventual change of the market’s sentiment which could reverse and break the highs, bringing us up to around psychological level 117.00 in extension.

GBPJPY

Monthly Overview - March 2011

With a monthly pattern very similar to that of EURJPY, the Geppy has continued on the bullish side since the beginning of the year, after a double bottom/tweezers candle pattern (December 2010/January 2011). The price reached the 50% retracement on previous swing low and was rejected down to the 38.2% Fibonacci level, there is still room on the upside towards the middle line of the Bollinger bands and top line of the symmetrical triangle formation. Target levels in this direction would be a test and break of 135.60, then 138.00/50 (61.8% retracement/top of the triangle) and finally a retest of the highs at 145.70. A bearish break would lead in extension to around 120.00/118.00 (January 2009 lows and 127%, getting near 138.2% level).

GBPJPY Weekly Update at March 04 close

A bullish week for the Geppy which reached almost the previous week’s highs, also making a tweezer pattern on the weekly charts and inside an ascending channel inscribed into the rising wedge. On daily we can appreciate that it failed last Friday to make a new high and was rapidly rejected, and as of today the pin bar candle has been confirmed, however we are still trading above the SMA34 and middle line of the Bollinger bands. SMA100 and SMA200 are totally flat at the moment on lower time frames down to one-hour charts, so we might have a continuation of the ranging price action for a while before the market decides to break up and reach 136.70/137.80 area or come back down and attempt to overcome the strong barrier formed by the parallel higher moving averages, revisiting the previous lows at around 131.00 level.