Is A Jump In Japanese Yen Crosses This Morning A Return To Risk?

Daily Forex Technicals | Written by DailyFX | Nov 19 08 15:13 GMT |

Many of the yen crosses marked a sharp rally through the opening hours of the US session. However, with major technical levels still looming overhead and fundamentals projecting uncertain recessions and financial trouble, the DailyFX Analysts are weighing in on momentum that could determine whether this is a true trend change in risk appetite or merely a short-lived rally to sell in to. Currency Strategist - John Kicklighter My picks: Pending GBPJPY Breakout Expertise: Combining Money Management with Fundamental and Technical Analysis Average Time Frame of Trades: 3 days - 1 week Is risk appetite back on or are the Japanese yen crosses merely long-overdue for a technical correction after such an extended period of congestion overlaid with excessive volatility? Fundamentally, there have been few sentiment-shifting news or economic releases to drive a true change in the risk bias. However, when a market is trading at an extreme and can't find the additional fuel to sustain the pressure of being at these levels, capitulation often follows to find a balance with risk premium worked off. EURJPY has alread made a significant technical break; so it could sustain its reversal through momentum alone. GBPJPY still holds major resistance in place; so it will be a better gauge for the level of risk sentiment in the market. From a technical perspective, GBJPY is still just off of 13-year lows; and price is working its way into a major breakout setup. Driven by a falling wedge beginning with the September 28th swing high, a steady falling trendline with many tests has defined the higher time frame bear trend well. Add to that the spike lows in a double touch just below 139; and we have the makings of a major breakout scenario. Right now, the market still has around 1000 points of room to trade in without having to make a decision on broader direction. Besides holding the aforementioned trendline, resistance around 148.50/90 holds a major pivot level (that has acted as support and resistance for more than two decades) and a 38.2 percent retracement of the Oct 30th to Nov 13th downdraft. I will look to range trade this pair in reduced size and be prepared for confirmed breakouts with full size positions. A higher time frame bar's close above 149 or below 140 will mark my optimal breakout scenario. Currency Analyst - David Rodriguez My picks: Sell USD/JPY Rallies Expertise: System Trading Average Time Frame of Trades: 2-10 weeks The USD/JPY has been rallying fairly steadily as of late, but the pair nonetheless remains within its medium-term downtrend. Given that I maintain a bullish bias on the Japanese Yen, it makes sense to use this as an opportunity to go short the pair on rallies. That said, I'll look to get into a position above the 97.00 mark, placing max risk above previous spike-highs of 98.26. This is a shorter-term trade than I typically go for, but risk to reward ratios look attractive here and I'm willing to take on the risk of a short-term breakout to the topside. Currency Analyst - Ilya Spivak My picks: Long GBPJPY above 150.09 Expertise: Macro Fundamentals, Classic Technical Analysis Average Time Frame of Trades: 1 week - 6 months GBPJPY has put in a double bottom at the 139.00 and has paused to consolidate. Divergence with the RSI oscillator points to the likelihood of a bullish correction before the down trend resumes. Near term resistance stands at 150.09, the intersection of a downward-sloping trend line connecting the highs from 09/25 and the 14.6% Fibonacci retracement of the 07/24-10/24 decline. Look for a daily close above this level to go long initially targeting 161.75, the 11/04 swing high. Currency Analyst - John Rivera My picks: Short CAD/JPY Expertise: Fundamentals Combined With Technicals Average Time Frame of Trades: 4-8 Days I am bearish the CAD/JPY as the outlook for the global economy is continuing to decline and the demand for raw materials will continue to decline. We are seeing the 20-Day SMA serve as staunch resistance and the narrowing of its trading range makes it susceptible for a breakout. The 11/13 low of 76.16 is my target with a test of psychological support at 75.00 a possibility. Currency Analyst - David Song My picks: Short CAD/JPY Expertise: Fundamentals and Technicals Average Time Frame of Trades: 2 - 10 Days Fading risk sentiment paired with falling oil prices favors a bearish outlook for the CADJPY, and may fall back to test the October lows over the near-term as the flight to safety continues. On 10/27, the pair slipped to a low 70.98 after peaking to a high of 103.50 in September, but bounced back at the beginning of this month to find short-term resistance near 87.20-30 (50.0% Fib level). The lack of buying pressures to move higher suggests that the pair will fall to retest last week’s low of 76.17 before working its way down towards the October lows. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. 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