Price action in the Yen crosses confirm Monday’s suspicions that the next wave of risk aversion is underway.

Euro / British Pound

Staying below 8846 keeps the EURGBP headed lower in a final small 5th wave in order to complete the decline from 9158. 8537-8574 would be a target area. The lower level is where wave 5 = wave 1 (of c) and the higher level is where wave c = wave a (of C). A rally above 8846 would favor the idea that wave c of a triangle (triangle began in late December 2008) is complete.

Euro / Swiss Franc

No change: “Continue to favor the downside, against the spike high from February 5th. Additional weakness targets the 2008 low at 14300.”

Euro / Canadian Dollar

The EURCAD has turned up after reaching the December 2007 low at 14139. A rally above 14397 would break the series of lower highs but a daily close above the steep channel would suggest that the pair is building a base from which to work higher. Short term support is at 14236.

Euro / Australian Dollar

From Monday, “the EURAUD is now in decline for the 13th (Fibonacci) consecutive straight month. Prior to this streak, the pair advanced for a Fibonacci 8 consecutive months. The 2000 low at 14991 has almost been reached and monthly RSI (14 period) is at its lowest point since 1981 (DEM rates pre euro). Still, until evidence of a reversal (and a point of reverence to place a stop), it is foolish to buck the trend.” On Wednesday, I wrote that “the decline from 15960 is in 5 waves (and in turn possibly completes 5 waves down from 16633) so at least a correction is due.” The EURAUD has reached initial resistance from former support at 15267. At this point, the rally is simply a correction but a rally above 15412 would create overlap and present an opportunity to buy a dip.

Euro / New Zealand Dollar

I wrote Monday that “there are 5 waves down in the EURNZD from 20077 (same situation as the EURAUD). The decline could be the end of a correction (flat) or the beginning of the next leg down.” At this point, the rally qualifies as simply a correction so the EURNZD remains vulnerable. If the rally extends into 5 waves, then I’ll turn bullish.

Euro / Japanese Yen

The impulsive nature of the decline from 12528 suggests that the corrective advance from 12067 is complete. Look to short the small 2nd wave rally. Resistance is at 12284, 12322, and 12362. A break below 12000 would shift focus to 11500.

British Pound / Japanese Yen

“Big picture, it remains my contention that the rally to 16310 completed a 4th wave correction and that the GBPJPY will eventually decline to a new low beneath 11879.” After reversing at the top of a short term channel, the GBPJPY sliced through the bottom of the channel and is now testing the low from earlier this month. A break exposes 13568, then 13142. The key level is now 14366. 13965-1.4057 is a resistance zone in the event of a rally.

Swiss Franc / Japanese Yen

The CHFJPY is in the same situation as the EURJPY. The larger trend is considered down and risk can be moved to 8550 following the sharp decline from that level. Short term resistance is at 8377, 8405, and 8433.

Canadian Dollar / Japanese Yen

I wrote Monday that “after trading just above a resistance line, the CADJPY reversed and price is slightly below steep trendline support. The evidence has surfaced so it is time to attempt shorts.” The CADJPY has plunged in 5 waves and the larger trend is down against 8849. Any rallies should prove corrective. Former supports are now resistance at 8616, 8671, and 8713.

Australian Dollar / Japanese Yen

The AUDJPY decline from 8625 unfolded as a textbook 5 and the rally from 7617 is a sharp zigzag (2 consecutive 5 wave rallies). The decline from 8284 is also an impulse, thus risk can be kept to that level on shorts. 8070 and 8115 are resistance.

New Zealand Dollar / Japanese Yen

The NZJPY is in the same position as the AUDJPY. The decline from the January high is impulsive (5 waves) and the succeeding rally is corrective. The drop from 6456 is unfolding as an impulse (small 4th and 5th waves look likely at this point) so it is highly probably that the larger trend has turned back down. Resistance is 6277 and 6332.

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com.

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