USDJPY and EURUSD Technical Analysis

• "When the Yen strengthens as it has at the beginning of 2016, there is often stress in the global economy. So far, the JPY has strengthened by ~2.5% to start the year vs. the US Dollar while most currencies, most notably the commodity currencies have weakened aggressively. USD-JPY is in a precarious position much like the global economy is in a precarious position. Many expect a rally in risk, even if it is just a short-lived rally because we have been trained like Pavlov’s dog to expect a bounce when risk-aversion takes over in equities & JPY. However, the Fed is done easing, and is, in fact, tightening, and the truth about China is that we do not know how bad things are over there with certainty."
• "An important word of note, USD-JPY has shown a propensity to triangulate. For shorter-term traders who are keen on daily targets and invalidation levels, this may be no problem. However, for swing traders and multi-month triangle pattern can be frustrating and worth avoiding or turning to a shorter-term trading plan. Should a triangle be playing out again, support should hold at the August 24 low of 116.07 while the upside up towards the 61.8% retracement of the November-January range near 121.75."

W1 price is located to be below yearly Central Pivot at 120.63: the price was reversed to the bearish condition by breaking Central Pivot from above to below for the S1 Pivot at 115.41 as the next target:

• If weekly price will break S1 Pivot at 115.41 to below so the primary bearish market condition will be continuing, otherwise the price will be ranging within yearly Central Pivot and yearly S1;

Instrument	S1 Pivot	Yearly PP	R1 Pivot
USD/JPY	115.41	120.63	125.41

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EUR/USD
Monthly

"EUR/USD has been holding its long term trendline support since March 2015 (even the January low is right on the line). November and December trade produced a tweezer bottom (reversal candlestick pattern…bullish in this case) as well. 2 scenarios seem most likely from the current juncture; a continued range (with roughly 1.15 resistance) or a bullish base that leads to an eventual breakout into the 1.20s. Both point higher from current levels."

GBP/USD
Weekly

"Unlike EUR/USD, GBP/USD has failed to hold its trendline that originates at the 1985 low (this is the case as of noon in NY Friday…the line is at about 1.4390). The cross is on the verge of taking out the 2010 low at 1.4229, which would put GBP/USD at its lowest level since March 2009. The next market level that might stem the freefall is the 1.40…in part due to the psychological aspect of the figure but also because of the presence of a parallel (parallel to line that extends off of the 1992 and 2007 highs)."

AUD/USD
Weekly

"Recent AUD/USD comments were that “the dominant downtrend is very much intact but there have been prolonged periods of trading around this median line that gave way to decent counter trend moves (rallies). In other words, everything since the September low may very well be corrective but AUD/USD could trade in a more or less nonsensical range for a while longer before the downtrend attempts to reassert.” Weakness has resumed and the measured objective from the latest range is .6433."

USD/JPY
Weekly

"The uptrend that USD/JPY enjoyed since the December 2012 breakout is over. The cross topped nearly 7 months ago at a long term trendline. All of this doesn’t mean that USD/JPY can’t or won’t experience rallies. All of this does mean that rallies should be sold. Be patient and use stops."



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EUR/USD
Weekly

-Long term comments remain valid – “EUR/USD has been holding its long term trendline support since March 2015 (even the January low is right on the line). November and December trade produced a tweezer bottom (reversal candlestick pattern…bullish in this case) as well. 2 scenarios seem most likely from the current juncture; a continued range (with roughly 1.15 resistance) or a bullish base that leads to an eventual breakout into the 1.20s.”
-Near term, FXTW suggests watching for support on the shorter term median line (bold black line on the chart above) in the mid-1.0600s. The market has been in a tight range since December.

GBP/USD
Weekly

-"The next market level that might stem the freefall is the 1.40…in part due to the psychological aspect of the figure but also because of the presence of a parallel (parallel to line that extends off of the 1992 and 2007 highs).” Cable bounced higher this week but price needs to establish above 1.4400 in order to suggest that even a short term low is in place."

USD/JPY
Weekly

-As noted in the Q1 technical outlook, a head and shoulders pattern yields a target near 105.” We got a rally! In fact, the rally materialized following a test of the neckline from a year-long head and shoulders pattern. Watch former support (lower parallel from previously bullish market and 55 week average) for resistance.


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USD/JPY W1

"Last week’s reversal materialized from the neckline of that pattern. This week’s follow through has resulted in a test of the 55 week average. The 2015 high was right at the 1990-1998 line (log scale), so a broader topping formation is still possible." The price is ranging around Central Yearly Pivot at 120.63 waiting for the following direction and targets:

• R1 Pivot level at 125.41 for the bullish scenario, or
• S1 Pivot level at 115.41 for the bearish scenario.

Instrument	S1 Pivot	Yearly PP	R1 Pivot
USD/JPY	115.41	120.63	125.41

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The key thing with this pair is that it is now pulling back into an area which we should expect to be supportive. The problem is that it is not clear at what price the support will eventually kick in. Nevertheless the area at around 1.1050 was the upper limit for a few months and we had a forceful breakout above that during the recent leg up, so it is logical to expect some kind of bounce.

There are no really key obvious levels below 111.00 and 115.54 and both of these are probably too far away to be of any use before the FOMC release tomorrow. However if the pair found strong support at 113.00 it would not be surprising.

Go short following a bearish price action reversal on the H1 time frame immediately upon the next entry into the zone between 1.1337 and 1.1400.

the support at 113.00 becoming stronger so this has been included in the chart below. There is an area of important resistance close to 116.00 above

Yesterday was dominated by the FOMC releases. The Federal Reserve sees U.S. inflation outlook as weak, global growth beset by problematic spots, and the U.S. economy due two rather than four rate hikes later this year. This caused the market to turn decisively against the USD, which fell everywhere, and for the first time in a long while, most of the major global currencies are solidly bullish against the greenback.

There was initially some support at 112.00 but the sentiment against the USD is strong and nothing can really prop up that currency yet, so the pair continues to fall.