Yen Pairs At Inflection – Battling The Daily 200 MA

Yen Pairs At Inflection – Battling The Daily 200 MA

Some of the most interesting Forex pairs over the last few Weeks have without doubt been those involving the Yen.

My recent coverage of AUD:JPY  has made it quite obvious that this one has stood out as my favourite on the bullish side for “long” trades.

But what about the rest? Where do the other Yen based pairs stand in technical terms?

Well, I think they can be divided into 3 main groups, the outragously bullish ones such as AUD:JPY and NZD:JPY, the median pairs such as GBP:JPY, USD:JPY, SGD:JPY and CAD:JPY, and the stragglers EUR:JPY and CHF:JPY.

Knowing that we can use the bullish but overbought Yen pairs and the bearish but oversold Stragglers as the basis of an informed overall directional bias, I’m going to avoid these and look at the main median pairs for further clues.

GBP JPY

Daily chart shows an ongoing battle with the green 200 MA, and immediate overhead “gap resistance”:

4 Hourly chart shows a failed back test of a trend line that formed part of a previous triangle break-down, whilst MACD shows negative divergence:

USD JPY

I don’t trade this pair very often, but I do check out the retail sentiment from time to time which is practically always outrageously bullish. No idea why, my chart only goes back 40 years and it’s been trending down throughout that time. Only a super hero is going to catch the all time low on this pair!

On the Daily chart I’ve marked 77.70 as an approximate area of resistance and price currently resides between there and the 200 MA. Todays candle has the potential to close as a bearish engulfing so this is also worth watching:

The 4 hourly chart shows a large bearish engulfing candle hanging from that same 77.70 resistance level:

CAD JPY

Of the 3 “median” Yen pairs I’ve covered here, this one would be my least favourite on the long side, yet it does show very similar characteristics to those detailed above with regards to price testing the Daily 200 MA and a potential Doji candle forming for today:

In conclusion we can clearly see almost identical characteristics across these 3 pairs which makes them all worthy of watching for the earliest clues towards the next trading direction. Overall, my bias here has to be bearish based on what I can see, but my bias is certainly not confirmed at this stage.

A clear upside break of the current trading range particularly in the 2 pairs with immediate overhead horizontal resistance would certainly suggest a sharp rally could unfold for immediate entry on the long side. In reality at this stage of the move from the 2011 lows a pull back from the 200 MA appears most plausible so I’ll be actively seeking quality intraday short set-ups, probably in GBP:JPY with a view to seeing an initial move of around 100 – 120 pips (121.10 target area). However, if this does not materialise and we get a strong break of nearby resistances and a daily close above those 200MA’s, then the long side beckons for a sharp rally with an open target.

Don’t forget to keep your eyes on the bullish AUD and NZD Yen pairs as well as the straggling EUR and CHF Yen pairs as these could offer the best signs of confirmation ahead of entering your chosen trade.

As always, be sensible with stop loss placement particularly if trading the short side (i.e long Yen), BOJ have a habit of turning up when you least expect them too!

4 Comments
  • RS2OOO
    Posted at 10:57h, 14 February

    USD:JPY found support on today’s 200 MA so I’ve entered a long with stop loss currently below this Week’s low, but looking to tighten this as soon as possible once I’ve carried out further analysis on a daily closing basis.

  • GBP:CHF Long Re-Entered And Mid Week Update
    Posted at 23:41h, 15 February

    […] log. As a recap:USD:CAD – I remain long from 0.9993 on the basis of daily candle closes above 0.9979USD:JPY – I remain long from 78.03 and will probably stop out on a daily close below today’s […]

  • RS2OOO
    Posted at 17:39h, 22 February

    USD:JPY long now closed at my ultimate upside target of 80.26 for +223 points. Even this was more than I expected, but as this area is possible resistance on the Weekly chart and price travelled there in a straight line, I’ve chosen to just bank it rather than try sitting through a correction that’s probably not far away.

  • The FX Market With Charts From My Watchlist
    Posted at 11:54h, 26 February

    […] the short Yen trade offered safest level’s of risk reward and I traded this in the form of a USD:JPY long that I closed bang on my target level on Wednesday for a nice 223 point profit.There were plenty of […]