EURJPY nears the start of something big

[Mercury]

Having looked at GBPJPY last week I was intrigued to see what EURJPY has to offer and it is interesting.  It seems to me that this pair is aligned to GBPJPY except that it doesn't look like it will run as far, which means that my initial long term outlook for EURGBP to weaken could be supported here.

 

Looking at the Monthly and Weekly charts we get the long term picture with, unsurprisingly, long term Yen strength but it looks to have bottomed out and put in the first part of either an large A-B-C retrace or the beginnings of a strong move in the opposite direction.  Currently there is a retrace of that first move back up in EWT1-2 form that could be nearing completion on or about the Fib 76% off the relatively recent rally up to A or 1 (purple).  If we look at the Daily chart we can see a potential small retrace in action right now that could turn into a small wave 3 heading down towards that Fib 76% termination.  After that a strong rally would be indicated.

 

You get a similar reading from GBPJPY and with EURGBP seemingly set to rally in the short term and EURJPY set to fall then GBPJPY should also fall.

 



[Mercury]

Don't know if anyone decided to trade this pair Short or not (or GBPJPY either).  Given the uncertainty and complexity around all USD pairs and indeed other crosses like EURGBP I have been focusing my attention on the Yen, which often seems to offer something alternative.  I am Short USDJPY and have also taken Shorts on both EUR and GBP/JPY.  Even if GBP and EUR rally post FOMC I believe the Yen will rally harder and the technicals support further short term falls in both these JPY pairs to a wave 2 conclusion before a strong rally in line with USDJPY rally.

 

The Daily Chart looks very similar to the USDJPY so if you believe that pair is going down then there is a good chance this one will two.  I am looking for a touch on the 76% Fib area to complete the final wave of the Wave 2 retrace from the Weekly chart.

 

The 4 Hourly shows a Triangle retrace pattern that may be about to see a breakout down after the completion of a small scale EWT1-2, which suggests we are in a wave 3 down (long and strong move).  I expect this move to break through the lower Triangle line hard and not look back when it eventually does breakout.  Neg Mom Div is supporting this forecast.

 



[Mercury]

Keeping with the JPY theme from USDJPY I have been tracking EURJPY for a while now and shorted when it reached the Triangle line and resistance zone (hourly chart).  Looks like a possible pin bar reversal in play off the Triangle.  Follows prognosis for a period of weakness on USDJPY and suggests EURUSD rally may turn slow or back down.