The Santa rally is here; indices are skyrocketing with the DAX finally hitting all-time highs, which is pretty remarkable if you ask me.
Today’s analysis will focus on the Japanese yen, which is part of three very interesting setups.
Let’s start what I believe is the best pair, the EUR/JPY. Here, we definitely have a positive sentiment, which originally started with the inverse head and shoulders pattern in Q4. After the price broke the neckline, we got a very nice upswing followed by a flat correction shaped like a rectangle. Yesterday, the price broke the upper line of the resistance and today, for the first time since August, it’s trading above the major horizontal resistance of 126.7. Once the price closes above this resistance, we’ll get a proper buy signal.
Now the AUD/JPY, where the price is preparing for a major buy signal. First of all, the AUDJPY broke the crucial long-term down trendline, connecting lower highs since 2014. Furthermore, the price created an inverse head and shoulders pattern and the price is currently trying to break the neckline. A breakout from that resistance level would trigger a proper long-term buy signal.
Finally the USD/JPY, a combination of two weak currencies, which leads to a sideways. Recently, the price bounced from a combination of dynamic and horizontal resistances. If the price stays below those resistances, there’s no buy signal. We will, however, see a buy signal if one of two scenarios plays out; either if the price manages to close the day above the two resistance levels, or a if there’s a breakout of the mid-term dynamic support connecting higher lows since mid December. As for now, we’ll wait, the signal will most likely come soon.