Japanese Yen Inflection

We will discuss the significance of the Japanese Yen inflection area, EURUSD, GBPUSD, and the emergence of the GBPNZD bullish bullet in this weekly forex report.

Highlights

• Last week, we have clearly forecasted the weakest currencies to be CHF, NZD and JPY. We clearly warned about the turning of JPY due to the inflection point as we wrote in the citation, that JPY shows some signs of reversal last week. USDJPY, GBPJPY and EURJPY produced a Mini weekly Key reversal but the reversal was not that indicative of major turn. Following days would confirm the outlook.
• We have been discussing the importance of GBPNZD skyrocketing of multiple 1000 pips from the lows. And every week the instrument is improving to sky rocket. We expect an awesome trading opportunity in this instrument for the weeks and months ahead. Buying at lower levels would be good. EURUSD tried to go higher last week by having a Key reversal at supports but the current conditions show some higher risks in the instrument. EUR might be weaker due to the strength of dollar flight to safety, for some more time. We suggest to avoid this instrument.

Japanese Yen Inflection

Last week, we emphasized the importance of trading all Japanese yen pairs at long-term inflections. At the key inflection point, the weekly close last week produced a mini reversal. However, the strength of the reversal was insufficient to call a top yet and this week would confirm this outlook . The patterns in all Japanese Yen pairs, in particular, indicate that a breakout can take all instruments to new highs, but that a pause and pullback is likely. In USDJPY, RSI is trading at overbought levels for the first time since the strong sell signal was triggered in December 2017, indicating that this pair could be nearing a top. Alternatively, it has the potential to break bearish formations and have an impact on all other correlated FX and commodity pairs on the board. After the historical perfect men’s head and shoulder, the descending triangle is an impressive bearish pattern that cannot be denied in any way.(Japanese Yen Inflection)

Zooming out to a daily chart of the USDJPY, it’s clear that the first hit to the lower blue line was a KEY reversal, while the second hit produced a weekly key reversal. This indicates the presence of a pause in the instrument. If the USDJPY forms a top, gold will surge higher. Due to the FOMC, the next 24 hours will be crucial.

On the other hand, the EURJPY produced a weekly key reversal. This is the instrument’s first reversal after a seven-week run of gains. The instrument’s monthly chart shows the significance of current levels. When the chart is zoomed out to a weekly basis, a weekly reversal can be seen.

Last week, we marked the circle of resistance where the price could pullback in the GBPJPY. Price produced a Weekly mini key reversal from the suspected area, indicating that the pound is gaining strength. As mentioned last week, this instrument appears to be headed higher in the long run, but a pullback from this level is expected. This was first reversal after 14 weeks of bullish run.

Pound Strength

The pound remains the strongest currency on the board, but a suspected pullback is underway. GBPUSD spent the entire week in a mini red channel before breaking out and heading for the blue channel as the recent week’s support. The GBPUSD may correct lower as a result of the dollar’s strength. Please see previous posts for long-term instrument support.

We’ve been discussing the weakest currency, the New Zealand dollar, and the strongest currency, the British pound. The strongest pair to trade higher as a result of this combination is the GBPNZD. We’ve been talking about it for a few weeks now, and the situation is getting better by the day and week. We expect this pair to advance thousands of pips from its lows, making it the best pair to trade. The minimum targets for this instrument are 1.98 and 2.02, but after a pullback, this instrument would go much higher from these levels. Everything is illustrated in the chart below. In 2016, , the instrument produced a bullish complex CUP & HANDLE, which led to a series of bullish formations. This instrument produced a W pattern after a breakout, and it is now generating a head and shoulder pattern, which will take the pair to new levels soon.

Dollar Strength

The dollar is bouncing off its lows. The patterns indicate that the bounce is not yet complete, and that there may be some sideways trading in the coming days. Long-term trends, however, remain bearish, and the reason for this rebound is the presence of strong long-term support. Which would flush the dollar if it were to break. It is currently too risky to trade, and we believe the bounce will continue.

The dollar’s strength is attempting to drag EURUSD back below the defender. The EURUSD monthly chart shows that March is a critical month, and price must not close below this mega flag for the bulls to remain active. The breakout scenario would be ruled out if the monthly close was below this blue defender. A weekly key reversal on the defender line, on the other hand, was a buying opportunity that was nearly wiped out by last week’s candle. Price produced a weekly inside candle as a result of dollar strength, looking for sell signals below 1.83 (Caution).

Both the EURUSD and the USD remain crucial to us. We don’t advise trading in these instruments.

Japanese yen related pairs are trading at inflection point, where a continuation of long-term bullish Yen can lead USDJPY to lower levels. However, a breakout in this area would indicate further Yen weakness. In USDJPY, EURJPY, and GBPJPY, a Key Reversal last week could signal the start of a pullback from this region while trading the EURUSD this week is risky. Following the strengthening of the pound and the weakening of the New Zealand dollar, the GBPNZD has emerged as the most powerful trading instrument in the markets, as we have been discussing for the past few weeks. A GBPNZD pullback must be viewed as a buying opportunity.

To receive the free trading alerts, signals and articles please subscribe as a Free member to the link below.