Pure Guesswork

Is that it? While attention has been elsewhere (Europe), has a long term bearish pattern in the USDJPY pair completed itself?

This pattern goes back to early 2010, when the pair traded in a range around 0.9300--0.8900. An impulsive move down had a major Fibonacci target (2.618) around 0.8260. We got to that level and surpassed it by late summer. Then for months it oscillated around this level, before spiking down in March of this year to the next major level down (4.236). Then back up to the 2.618 range trade.

By late Spring we were on the move down again, stopping for a bit around a minor Fibonacci level, then sinking once more to the 4.236 level around 0.7630.

But this time the level did not provide a center of gravity but an actual floor for prices. Since August we have traded in a contracting range with no real energy on the downside. Yesterday we had a spike down to the 0.7630 level once more and once more a violent snap back above 0.7700. Today we sold off a little and then trading seemed to dribble to a halt. Eventually we will move off this level one way or the other. For now it seems increasingly evident that nobody want to sell dollars for yen at this level. Nobody at all.

Posted by Pure Guesswork at 3:40 PM | Permalink | TrackBacks (0)

We find a 3 wave corrective pattern beginning at the low on November 26th of last year and ending with the top made on the first trading day of 2010. The third wave, labeled as Z on the chart below, took almost 3 times as long to unfold as the initial X wave up--yet they are equal in length.

An 8 hour chart:

While there has been a higher high since that 93.20 high on January 4th, it can be seen as the 2nd wave in an irregular corrective move to the downside.

On the following 2 hour chart one can see how the 3rd wave of this minor correction (to the the larger corrective move) ends at a level exactly 1.272 times the distance of the initial wave.

There is an additional interesting symmetry in the irregular (y) wave. It also involves the minor Fibonacci ratio of 1.272, ending 1.272 times the length of the (x) wave (as figured from its beginning).

Thus we have an initial corrective move down, and then a widening corrective move in 2 larger waves, each of which has a 1.272 relationship with the original (x) wave.

Posted by Pure Guesswork at 8:02 AM | Permalink | TrackBacks (0)

Following up on this post from mid-March and charts from earlier in March.

Are we done now?

Posted by Pure Guesswork at 12:16 PM | Permalink | TrackBacks (0)

A few charts, all leaning toward the general point of view that we have been in a broadly sideways corrective move in USDJPY since February 27, even with the higher high on March 5th (which should be seen as an irregular Y or B wave). The low last Thursday, March 12th, was almost exactly 1.618 times lower than the first wave down ( less than 10 pips off).

And the low at the 1.618 level on Thursday was very spikey, bringing in immediate and very vigorous buying.

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The would posit an intermediate impulsive high at the 98.71 top on February 26, with the subsequent higher high at 99.67 the end of the second (irregular) wave of the corrective move ongoing since that time. Using this pattern a third wave could be projected to end at 95.71, 1.618 times the distance of the first wave. Low today was 95,65, six pips from that projection. Bounce is rumored to have begun with nice bids from a Swiss bank. Move upwards from this point of inflection has been steady since that time.

Posted by Pure Guesswork at 7:36 AM | Permalink | TrackBacks (0)

Same pattern followed last week in USDJPY remains valid (see here, here, here, here and here). Former fibonacci 2.618 target at approximately 96.80, once passed, became impressive support following the pullback from last Thursday's high. That high came at the minor fibonacci level (3.33) between major targets at 2.618 and 4.236.

This morning we have gone decisively through last Thursday's high. Next stop 101.20?

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Support at former upside 2.618 target holds for now.

4.236 target, presuming resumption of uptrend, remains around 101.20 yen:

Posted by Pure Guesswork at 9:23 AM | Permalink | TrackBacks (0)

Working on the same fib pattern--with projection of a top above 101--shown in post from a few hours ago. A serious bounce off the 2.618 level.

8 Hour chart showing whole pattern from initial base:

A spike down and sharp recovery.

Detail shown more clearly in 30 minute chart:

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As indicated yesterday, we seem to be in a pullback from the minor fibonacci level above 2.618 (and below 4.236). It is unlikely that this minor point of resistance will provide a short term top.

Instead we should eventually try to complete this pattern at the 4.236 fibonacci target above 101.

Watch to see the nature of this retracement. The move to the 4.236 target above 101 could be different than the impulsive moves we have seen lately. There could be a lot more two way action as sentiment shifts, becoming more cautious (traders locking in profits above 100 yen).

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The market seems to be growing out of this pattern first noticed last week:

There was minimal resistance overnight at the 4.236 fibonacci target area, but then it was off to the races again.

But the larger pattern which grew out of the first pattern seems to be still influencing price action.

At the moment we have some resistance at the minor fib level between the 2.618 and 4.236 targets. So far the action has been tepid and sideways, but after such a parabolic move, we could see some genuine two way action. Nevertheless, the pattern now posits a target slightly above 101.

Posted by Pure Guesswork at 2:56 PM | Permalink | TrackBacks (0)

SInce last week I have been following this pattern evolving on USDJPY:

To be perfectly frank I thought it was over when the 2.618 delta area was hit last Thursday and my initial trade was a short. But then when it reversed and broke above that level, I began to project the 4.236 level as the next extended target.

But then I saw another pattern--taking the high that occurred near the 1.618 top as an alpha and the subsequent low as a beta, you get this:

Yikes. Which is the valid pattern? Both, probably. They are interwoven--and in a sense, one springs out of the other. But eventually one will eat the other.

Here are some 4 hour charts where the degree to which the price action was entrained to the fibonacci levels becomes even more apparent.

Posted by Pure Guesswork at 5:06 PM | Permalink | TrackBacks (0)

Continuation of pattern shown first last Thursday. Next target 97.80?

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Continuing the view of the pattern noted yesterday, the 2.618 target continues to form a zone of resistance.

4 hour chart:

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Quick and dirty chart. Possible exhaustion of latest bull move in USDJPY at the 2.618 target.

4 hour chart:

Posted by Pure Guesswork at 12:23 PM | Permalink | TrackBacks (0)

Delta 4.236 (89.00) target met.

Although there was a severe spike down to 88.15, a look at a 5 minute chart shows that even on this tight timespan there was no close below 89.00.

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After an initial fall from the spike high this morning, USDJPY retraces 78.6% of that distance and fails again (at least so far).

Posted by Pure Guesswork at 10:11 AM | Permalink | TrackBacks (0)

Still more to go on downside? The chart pattern does not look like a bottom. And a fibonacci projection calls for a target somewhere below 89.

A 30 minute chart shows how the pair had been trading around an intermediate fibonacci level (3.33--between 2.618 and 4.236) in a symmetrical triangle; and then, near the end of the Asian session, rallied up to the 2.618 level and failed signficantly there.

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An update on yesterday's post on USDJPY. At that time the USDJPY had pierced the 38.2% level of the entire delta move from the beta low to the 2.618 target met on August 15th. The next target down was the 50% level around 106.60. A sharp move down went through that level and then bounced very strongly off the 61.8% corrective level (which corresponds to the original alpha level. It has since been trading around the 50% retracement level; after the bounce off the 61.8% support the range has been from 107.30 to 106.15. It is likely--after a spike low and subsequent recovery--that we will see the market slowly trade down to test the 105.65 level again.
Shown on an 8 hour chart:

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Delta 2.618 target was 110.75. Actual high on August 15th was 110.65. A bit of a strange pattern for the 3 wave delta pattern after the alpha-beta base was formed. Having risen above the 1.618 delta target, the market then made a 3 wave corrective pattern that fell deeply into the base (falling, in fact 61.8% into the base). This seems to happen more often with the yen and might have to do with its close connection to panics in the financial markets as a whole. The corrective pattern corresponded more or less to the period when the pullback in the S&P from the May highs began to look more and more not like a correction to a further move up, but as a new leg down in the bear market. The low corresponded more or less to the mid-July low of the S&P right at 1200.

The second chart shows the internal fibonacci levels of the entire impulsive move. A fall to 106.60 would be a 50% correction. On Monday, September 1 (the Labor Day holiday in US) it had bounced off the 61.8% level. At that time it looked as if it might move sideways between that level and the high at 110.65 for a bit. But that, obviously, was not to be. It is trading right now below 107.55, the 61.8% level that held on Monday.

Next stop 106.60 to 106.50.

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Yesterday's chart pattern continued:

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Resistance at 2.058. Fell back to 1.618 and then up again. More back up before a burst towards the 2.618 target?

Posted by Pure Guesswork at 10:16 AM | Permalink | TrackBacks (0)

An update to this entry from last month (May 7):

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Following the posts of May 7, April 23, April 13, etc.--

102.28 would be the 0.786 level.

But the following chart is the result of projecting the alpha-beta base down from last Friday's high, which brings us to the area of support initially found in April after the move to the delta 1.618 level--

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Posted by Pure Guesswork at 6:29 AM | Permalink | TrackBacks (0)

Following the charts from Sunday afternoon, April 13:

and Tuesday, April 8:

it appears that the 1.0292 top reached in two wave patterns could be seen as an alpha, with the approximately 38.2% retracement of the move as beta.

And a 4 hour view:

Posted by Pure Guesswork at 6:59 AM | Permalink | TrackBacks (0)

The impulsive move seen on a weekly chart, the base being formed in late November through the end of December 2007.

And seen in more detail on a daily chart.

The retracement since the low in mid March, died out at a 38.2% retracement of the entire impulsive move from beta to the 2.618 delta. The retracement was in two separate wave patterns, the last of which described an impulsive move itself as shown in the post of April 8, 2008. As it was not able to get beyond 38.2% (of the impulsive move, let alone the entire move), the downward trend has not truely been broken. Thus we are in a sort of no man's land, waiting either for a resumption of a down move, or evidence of a new base being built for an impulsive move which will break that barrier right below 103.
To complicate things more, the retracement down of the two wave move up has itself been about 38.2%.

The low came last Thursday, April 10th.
My best guess is that we will likely see a break of this low, below 100 yen. Then it will be time to consider whether a new base is being formed for a new move up (perhaps this new move down will be the beta of a new base), or whether the mid March lows below 96 yen will be broken.
UPDATE at 5:40 PM
The G7 statement has thrown a little fear into dollar shorts, with the knee jerk interpretation being that co-ordinated intervention is not out of the question. Most of the move has been against the euro (and sterling to a lesser degree). The move against yen and swiss franc has been much more muted. This initial reaction is almost certainly to be tested if there is no more evidence forthcoming that the CBs are serious about this.

Posted by Pure Guesswork at 4:23 PM | Permalink | TrackBacks (0)

Two completed waves up since the low in USDJPY.
Significant word is completed. If market does not push through the 102.92 resistance (the 2.618 target of the 2nd wave), then it will have to build a new base for a move higher.

A closer look at 2nd wave pattern.

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