Home Daily Analysis Charts / Trade Ideas Yen Group – Long-Term Wave Analysis – Will JPY’s Strength Continue?

Yen Group – Long-Term Wave Analysis – Will JPY’s Strength Continue?


The Japanese Yen (JPY) is known as a risk-off currency. It means that when stock markets decline, investors tend to move to JPY as a hedge. In this post, we’ll review what to expect from the risk-of currency for the coming weeks.

JXY – The Japanese Yen Index

The JPY currency index (JXY) in the weekly chart shows the development of a triangle structure. The long-term pattern suggests the continuation of the bullish cycle started in June 2015. The breakout of the descending trendline of the triangle could carry to JXY to August 2016 highs (100.5.)

The potential target area is between 99.0 and 102.2. The invalidation level is below 87.3.

USDJPY – Watching the 100 level

The USDJPY pair develops a consolidation structure in opposition to that on the JXY. On this case, the triangle pattern calls for more declines. In the first instance, the USDJPY should re-test the triangle base. Our principal bias is bearish with a potential target between 103.53 to 100.55. A short-term recovery could reach the 112 level. After this recovery, the price should continue the main bearish bias. The invalidation level is at 114.55.

EURJPY – Limited declines

In the EURJPY cross, we observe a limited decline to the area between 116.870 and 112.094. From this area, we foresee a bounce which could visit the 2018 highs (137.506.) In this case, our bias keeps neutral, expecting the confirmation for the new rally.

GBPJPY – Watching for the potential bearish failure

The GBPJPY cross shows a higher lows sequence and develops the second leg of an internal wave. Our vision for this cross considers a new decline between 132.250 and 133.830. Once price reaches this area, the GBPJPY should start to bounce with the eyes placed at March 2019 highs (148.87.)

The control level for the bounce scenario is 130.699, the lowest level of 2019.

The summary

Summarising the potential next move for the yen group, the worst performer should be the USDJPY pair. This scenario agrees with the big picture for the US Dollar Index (DXY) released on June 07. In our article, we commented about our bearish vision for the Greenback (read the full story.)

Remember that the price is not compelled to move as our forecast proposes. The charts released corresponds to the Elliott Wave Theory application.


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