Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

DailyFX

On the verge of taking the 2011 high, the current EURJPY situation harkens back to the early 2001 rally. In the current situation, the 2011 high at 12332 may serve as the February 2000 high. In other words, that level needs to be taken out before price can correct in a meaningful manner.

EURJPY

Weekly

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_eurjpy.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: On the verge of taking the 2011 high, the current EURJPY situation harkens back to the early 2001 rally. In January 2001, the EURJPY rallied from below 90 and didn’t see any meaningful pullback until breaching the February 2000 high. In the current situation, the 2011 high at 12332 may serve as the February 2000 high. In other words, that level needs to be taken out before price can correct in a meaningful manner.

FOREX Trading Implication: Keep an eye on 12332 as well as a measured level at 12436 (extension of the most recent range from the most recent broken high).

EURUSD

Weekly

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_eurusd.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: Bulls face a test next week from the 2012 high and 50% retracement of the decline from the 2011 high at 13490. The most recent consolidation yields measured moves of 13495 and 13550 (see daily chart below). More aggressive objectives come in at 13800-13900 (61.8% of decline from 2011 high and where the rally from the 2012 low would consist of 2 equal legs AND channel resistance next week) and 14400-14500 (inverse head and shoulders objective).

FOREX Trading Implication: 13490-13550 is a level that could produce consolidation or a pullback. Given market conditions however, it’s probably best to position for an extended move towards the more aggressive objectives. The most recent breakout level is now support at 13403. I’m currently long with a stop at 13440. If that level gives, then look for longs near 13400.

EURUSD

Daily

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_eurusd_1.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

AUDUSD

Daily

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_audusd.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: AUDUSD triangles have formed from the July 2011 high (price is above that triangle line now) and the September 2012 high. I wrote this week that “predicting the direction of the break is never a good idea but the latest pivot low can be used as a point of reference. In other words, stay bullish for an upside break as long as price is above 10485.” What happened late this week exemplifies why anticipating the break is a bad idea. 10485 even failed and price is nearing the 61.8% retracement of the rally from December at 10441. Price is at the line that extends off of the October and December lows for support as well. A break here could see quick acceleration towards parity.

FOREX Trading Implication: Watching a breakdown through 10356 in order to get short.

Euro / Australian Dollar

Daily

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_euraud.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: The EURAUD has broken through the neckline from the inverse head and shoulders pattern that begin in February 2012. Long term objectives don’t begin until the March 2011 high at 14343. Bulls must contend with the 2012 high at 13030 before then of course.

FOREX Trading Implication: Looking to buy weakness from the current level down to 12800. Bullish risk is 12617.

Euro / Swiss Franc

Weekly

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_eurchf.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: The EURCHF is a market again and may be gearing for a run to counter at least a significant portion of the decline from the 2007 high. Price traded through the October 2011 high and closed above a multiyear trendline for 2 consecutive weeks. The next significant resistance level isn’t until above 13200. Trader sentiment surrounding this market is fascinating. Many were willing to sit in a position that did nothing for an entire year and many are willing to exit the position after several weeks of strength.

FOREX Trading Implication: Near term, price has carved out a bottoming pattern which is bullish above 12380. Look higher against that level.

Australian Dollar / New Zealand Dollar

Weekly

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Forex_Analysis_EURJPY_Potentially_Repeating_Pattern_from_12_Years_Ago_body_audnzd.png, Forex Analysis: EUR/JPY Potentially Repeating Pattern from 12 Years Ago

Prepared by Jamie Saettele, CMT

FOREX Observation: If 2013 is ‘the year of the breakout’, then the next big AUDNZD move is probably lower…a lot lower. A multiyear head and shoulders top is complete in the AUDNZD. After a false break in December, price is once again below the neckline. Weakness below October’s low (12370) is needed to get comfortably bearish.

FOREX Trading Implication: Bearish breakout strategies are valid as long as price is below 12700. Objectives from the head and shoulders top don’t begin until below 11000.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

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