Last week was written the vast majority of currency pairs contained break points within 100 to 150 pips in order for prices to see a better directional bias and no better example exists than to view EUR/USD Vs USD/JPY.
From USD/JPY’s close at 106.81 to its vital break point above at 108.47 is 166 pips while EUR/USD’s break point below at 1.2196 contains a distance of 112 pips.
USD/JPY’s 5 year average above is located at 109.74 and 293 pips from 106.81 while EUR/USD’s 5 year average at 1.1965 contains a distance of 343 pips.
From a longer term perspective, EUR/USD’s current price is miles to high and must travel lower while USD/JPY’s current price remains barely above neutral against the potential to travel much higher.
USD/JPY’s daily view reveals an extremely low and massively oversold price while EUR/USD sits just below neutrality. Massively oversold USD/JPY means from 106.00’s, 105.00’s and 103.00’s.
USD/JPY is well supported below against its vital break point at 105.24 and 104.69 while EUR/USD faces headwinds at 1.2315, 1.2358, 1.2375 and 1.2410. USD/JPY at its 14 year average at 103.01 won’t break anytime soon nor will EUR/USD break its 10 and 14 year averages at 1.2800’s.
Most important USD/JPY supports below are located at 106.62, 106.21, 106.17 , 105.35 and against the break at 105.24. Most important number is 106.39 because this number represents the bottom range point from 108.47 against the topside at 109.74 and 110.54. As the current uncertainty of prices targets gaps as opposed to strict targets, remember that long ago the Mind the Gap concept was written and explained .
Most vital above for USD/JPY on the way to 108.47 and 108.50 is 107.99 as a must break to see a challenge to 108.47.
EUR/JPY lies in wait at its vital breaks above at 132.24 and 133.58 against below supports at 131.55 and 130.69. The hurdles and break points between EUR/USD and USD/JPY decides EUR/JPY’s direction or its a continued and aimless, wandering range trade.
Below are averages dated to Jan 1999.
80 day = 110.31
Special Average = 108.47
334 = 111.96
592 = 110.90
847 = 113.85
1102 = 111.55
1279 = 5y = 109.74
1357 = 108.50
1613 = 103.83
1872 = 100.59
2129 = 99.12
2384 = 98.57
2562 = 10y = 98.97
2640 = 99.25
2894 = 100.94
3150 = 102.20
3409 = 102.67
3589 = 14y = 103.00
3665 = 103.10
3921 = 104.04
4175 = 105.35
4429 = 106.17
4686 = 106.21
4914 = 106.62
Brian Twomey