Currency Technical Analysis Report

USDJPY

After weeks of waiting USDJPY is back to rising. It did not fall below 61.8%. I am not sure of the long term structure but even if we consider corrective waves a move up to 115 or 118 again cannot be ruled out to start with

 

USDINR

On Wednesday I rejected the idea of any last move down in the USDINR as it moved up a lot. So we started minor wave iii up as discussed and earlier expeccted. On the long term chart i have repeated the 40 month average near 64 that needs to be protected and so far as shown below. Doing so the monthly chart would set up for wave 5 longer term to start. Here the 4th wave circle retraced close to 23.6% of wave 3 [63.04]. This meets the alternation requirement between waves 2 and 4, where wave 2 was 61.8%. Even within the third wave wave 2 is a running correction and wave 4 a zig-zag, meeting alternation in structure. Wave 5 of 3 shows loss of momentum. Now from here 5=1 points to 85 in the coming year. I say year as time is never exact. On the top of the chart you see two completed cycles with momentum back below zero. So the first thing we will look for is momentum to go back into buy mode and then above zero.

US 10 Years T Notes

Thanks to Fed we have the first day of a breakout in yields. Now to watch that the trend holds and continues after the event. Confirmed would mean wave 3 to a yield above 3% in the coming months. 

EURO

The Euro is at the fag end of a 5th wave rally starting April. The triangular base between Jan-Apr, can either be just that a triangle or waves 1-2 of the larger move. We will know which later. But taken as a triangle we have just completed the first meaningful advance in the Euro from a Long term Uptrend perspective. Now you may get a retracement of the rise. If the entire rally is a larger wave 1 then wave 2 down is open to all retracements. That will provide enough meat for the Euro bears to publish the End of Euro stories all over again. The real answer will come from the markets themselves. A higher bottom long term on extreme negative sentiment is what wave 2 declines are made of. There is no end of Euro anytime soon. Currencies do not just die, currency systems do. A break of 1.187 should mark the start of a clear downtrend that can last for 1-3 months

USDMXN

USDMXN bottomed in July in 5 waves. Wave A complete it is trying to start a wave B rally for a while. A move up should at least carry it to the 38.2% retracement mark near 19.20

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Leave a Reply

Your email address will not be published. Required fields are marked *