Relying on the Ichimoku cloud, we can clearly see how the main resistances of EurJpy were affected. The decision of the Bank of Japan to adopt the negative rate has given a sort of relief for a few sessions but now the yen purchases are coming back. At this point it is likely to witness a shift down as suggested by the lagging line. Maybe we could be wrong on the schedule, but the impression coming from the foreign exchange markets is that of a new bear paw in preparation. Obviously a non-technical answer to these indications would be interpreted in a very positive way for the resumption of the sentiment in the equity markets.
The recovery in oil prices has allowed the commodity currencies to recover a lot with several crosses positioned on very interesting support levels. One of these is represented by EURAUD. It does not take long to realize how the threshold reached on Friday will be decisive in a weekly view. A final breakthrough of 1.52 will change the trend and a return of buyers might fuel a new wave of sales of Aussie and commodities. This is a game to be played on Tuesday the 2nd, because the Australian central bank will decide on interest rates and a cut in the cost of money could go back to push EURAUD up.
In our view the Yen will still be the best exchange rate monitored by analysts to try and understand if the danger is escaped or not. On January 29th, some important data concerning unemployment and inflation will come from the Japanese country, but AUDJPY actually embodies the risk of a new correction on the horizon. As we can see from the graph the third bearish wave is colliding with the 20-day moving average, a technical watershed between a simple fix or a more sustained recovery. The theory is that here you can sell if the market lingers in breaking through the resistance. The target would be represented by the recent lows of 79.20.
The fall of UsdJpy is not over yet, as it seems from the suggestion provided by the ADX (the strength indicator of the trend). As seen from the chart, the 21 days moving average (119.30) will inevitably represent a major resistance on the way to the rebound, but when the ADX will exceed 40, then we will know that the trend (in this case a bearish one) will be losing its strength.
There is little doubt on what will be considered as the “threshold of pain”. December 2014, January and August 2015 have always found a support in area 116 and the key support has been approached on Friday too. We can try to go long with a solid stop below 116.
In these hours the bearish trend line that drives the downward from 2013 is being attacked; the tops of 2015 have been exceeded. At the opening on Monday we could end up with so many stop losses that could power a rise that would make it appropriate to return the English currency to the sender.
At the moment we decide to go long given the strategic importance of the resistance, but in case it would be exceeded for EurGbp we would get the formation of a bullish head and shoulder with target 0.80. This is in fact the theoretical space of a rise that indicates the technical analysis theory for a figure of this kind; this is the first useful level encountered after the disastrous fall of the Euro during last spring.
UsdChf is falling again below parity hitting supports that are driving the rise since August. It’s obvious that between 0.98 and 1.00 numerous dynamic support projections able to sustain an uptrend in favour of the dollar are passing. A bearish break would be worrying as it would feed a classic flight to quality generated by a market that is fearful of financial tensions. Since, however, the trend is your friend, we would better try the long UsdChf on the current levels.
ChfJpy continues its bear market now in place by June. The regular sequence of falling tops and lows has not yet found a disruption so far with the moving average beam that acted well as a resistance to any attempt to reverse the trend. The last rise in December was in fact rejected by the bears that are now restoring the bearish trend. ChfJpy might try to go and hit the November low in area 119 before attempting an assault to the resistance. Until then the short side is to be preferred. The stop loss should be placed above the top of the current month.
What we are seeing at the moment on the EurNok cross is quite a wide range but a very interesting one, to exploit in a tactical key. For several days the resistance of 9.60 is holding despite new lows on oil. In this sense we could try a short EurNok with the aim of seeing the action moved towards the lower base of this rectangle and positioned at 9.15 / 9.20. Very easy to identify the stop loss that has to be placed above the top of 2015, 9,627.
Even oscillators seem to confirm the view of a shift in the low range with clear divergences between Rsi and price.
The sell-off on another currency dependent on oil price as the Mexican Peso reached its climax last week with a new historical low against the US dollar.
The rising leg has stopped his run in area 17.5, i.e. the point at which the wideness of the movement started in 2013 is equal to that of 2008. Will it be enough?
The weekly RSI helps us at least to get a glimpse of the interesting divergences that we can also see on the oil price among the others. In front of the rising USDMXN, the RSI is falling as in 2009 and 2012, two years that favoured the resumption of the Peso. The chances that the first part of 2016 intercepts a bottom on commodities and currencies linked to them are rising.
Among the currencies with the best seasonality in the last month of the year we can certainly find the New Zealand Dollar. In 16 of the last 22 years, the Kiwi has closed the last month of the year with a good profit, and did even better against the yen (18 of 22).
Technically, NzdUsd is trying to exploit this window but most likely between 0.69 and 0.70 it will find a resistance barrier quite difficult to overcome. Around this point, in fact, we can find the resistance concerning the bearish trend of the last 18 months. For this reason, and in light of the bearish engulfing pattern of Friday, we would prefer to go short on NzdUsd with a stop loss above 0.70.