Yen Pairs Weekly Update and May 2011 Monthly Overview - April 29 close

USDJPY

May 2011 Overview

The Dollar-Yen went way below the support area closing near round number 81.00. We have a bearish engulfing candle signaling that there might be more downside for this pair in the next weeks. First target would be the previous lows of the spike down at 76.70/50, and the lower trend line of the descending channel 100 pips lower at 75.70. A further break of the channel and extension to the 127% Fibonacci level is possible. On the bullish side, another attempt towards April highs and middle line of the Bollinger bands in the 85.50/70 to 86.60/70 resistance area would be possible, with next target being the upper line of the channel at 87.80 or round number 88.00.

Price is presently trying to break the 81.00 support. Weekly charts show a 50% retracement on the bullish reaction to the spike down registered in March, and on daily charts we can see this pair trying to reach the other end of the Bollinger bands, although the present level was well supported in mid-to-late March. I would favor a further fall to the 127% or 138.2% Fibonacci extension on the previous daily swing low (80.60/20) as first target, if actual support breaks. Should it hold, we would be aiming back to the daily moving average confluence area between 82.40 and 83.00.

EURJPY

May 2011 Overview

The Euro-Yen made new highs in April and though ended on a doji candle, price closed above the middle line of the Bollinger bands and I would expect a continuation to reach the levels we were expecting last month: “further upside towards round number 125.00 on a medium term and longer term 128.00 which are the previous highs, aiming to a 61.8% Fibonacci retracement at 125.80/126.00”. Next longer term target would be the SMA100 and 2009 highs in the 138.60/140.00 area.

Euro-Yen is slowly but steadily climbing and despite some rejection at the weekly SMA100 level, I still maintain last week’s bullish projection targets: “a retest of the highs and an extension towards round number 128.00 in the first place (127.90 as the weekly 127% Fibonacci level). Further upside would lead us towards 130.00 (129.70 as the 138.2% weekly extension level). On the daily charts, I would expect price to reach 123.35 previous highs, and an extension to the 125.20/125.95 area (127% and 138.2% levels). Should price have another attempt to come back inside the previous channel, we would have to break 116.50 for a fall towards the SMA100 and SMA200 support area between the 138.2% and 161.8% extensions on the previous daily swing low, conservatively aiming for round number 114.00.”

GBPJPY

May 2011 Overview

The Geppy made new highs in April and closed on another doji candle, below the middle line of the Bollinger bands. Further upside seems compromised and we could go back to revisit the lows in the 122.50/40 to 118.80 support area (March 2011 and November 2008 lows), with a possible extension lower to the 127% Fibonacci level on the swing low, at around 111.30 for a longer term view. The pair has retraced to the 38.2% Fibonacci level, and a push further to the SMA34 between the 50% and 61.8% can be envisioned, for a short retest of March 2010 highs.

Should actual support at 133.80 hold, we could be heading to retest last week highs at 137.00 level. However I would favor a retest of the weekly lows and confluence of the weekly SMA34 and middle line of the Bollinger bands instead, at around 132.00/131.80 level. This coincides with the daily confluence of SMA100 and SMA200. Further downside can be expected to the 127% and 138.2% extensions on the daily swing low, closing the end-of-March upwards gap and looking for a retest of late March lows support at around 130.40.