1. CADJPY
2. CHFJPY
3. NZDJPY
CADJPY CAD/JPY continues to trade within the symmetrical triangle that began in early December 2005 at its 105.02 high. The question that we ponder is whether this pattern is a reversal or continuation. Last weeks candle completed a morning star pattern after a nearly 500 pip decline from 103.17 to 98.25, and thus the short term bias is bullish until trendline resistance, which is at 103.20 this week (the resisting trendline decreases by 7.3 pips per week). Increasing oscillators on the daily combined with the break of a short term trendline (see chart below) also favor longs. A break above the 100 day SMA on Friday puts immediate support at that moving average of 101.36. A pair can remain in a triangle for quite a while, often as long as two-thirds to three-fourths of the length of the triangle. With the apex of the triangle not until February 2007, the two-thirds to three-fourths dates put a potential breakout anywhere between 9/15/2006 and 10/20/2006. This obviously suggests that volatility will contract. So far, the resisting trendline as been decreasing by 7.3 pips per week and the supporting trendline has been increasing by 6.3 pips per week.
CHFJPY CHF/JPY plummeted after the triple top that was formed with the high at 92.95 on 5/24 but the pair found support at the confluence of the 50% fibo of 90.29-92.95 / 20 day SMA at 91.62/65. The last two days formed a double doji which preceded todays rally to 92.50. Daily oscillators are predominately bullish as are moving averages which slope up. An overbought signal on hourly RSI favors some consolidation of todays rally in the very short term. Support is at the 61.8% fibo of 91.50-92.56 at 91.91 as well as the 20 day SMA at 91.71. A resistance zone above which is bound by the triple top comes in at the 4/20 high of 92.67 on the low end and the 5/24 high of 92.95 on the high end.
NZDJPY NZD/JPY trades within a corrective wave 4 of a larger 5th wave, which suggests a short term bullish bias and longer term bearish bias. The pair has rallied from the 67.76 low on 5/15 to back above .7000. The downward sloping channel (beginning on 12/6/05) provides resistance at around 72.60. Daily oscillators favor continued strength to the trendline as momentum > 0 and RSI just crossed its 50 midpoint. Hourly RSI is strong as it heads towards 70 and price looks to test the 5/25 high at 72.06, which is also the 61.8% fibo of 74.72-67.74. A break of support at the 10 and 20 day SMAs of .7036 exposes the 61.8% fibo of 67.77-72.06 at 69.41.
Glossary of Terms
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CCI(20) 20 day Commodity Channel Index
> 0 bullish
0 > bearish
> 100 extremely bullish
-100 > - extremely bearish
RSI(21) 21 day Relative Strength Index
> 50 bullish
50 > bearish
> 70 overbought
30 > - oversold
MACD ? - MACD slope (MACD MACD[1])
> 0 bullish
0 > - bearish
Mom(8) 8 day Momentum (shorter-term direction)
> 0 bullish
0 > - bearish
ATR(14) 14 day <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />AverageTrueRange (volatility)
Medium 75th percentile* > ATR(14) > 25th percentile*
High - > 75th percentile*
Low 25th percentile* >
ADX(14) 14 day Average Directional Index (directional strength)
> 30 strong
30 > - weak
*measured against past 3 months
