Thursday, June 26, 2008

Monthly Euro-Yen

Euro-Yen is approaching a big round number.

170.00

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Here you have a monthly Euro-Yen. As you can see we have a very strong setup, but we are also at a possible monthly double-top area.

Globetrader_11

And Euro-Yen has already made the second target in this upmove, projected from the consolidation period in the pair from 2003 to 2005.

So we should prepare for a leg-down, before Euro-Yen starts to rally ahead to take out the new targets projected by the current consolidation area, which started back in mid 2007.

Globetrader_12

Of course timing the top and the start of the leg-down to the 50% retracement area near 159.00 isn't so easy from a monthly chart. Still looking at the 2003-2005 consolidation area might offer clues:

Globetrader_13

The second high made there was 141.54, before Euro-Yen started the leg-down to the 50% retracement area, which was followed by the leg-up to current highs.

I will watch Euro-Yen for a test of 171.50 and place some shorts there or more likely buy some puts once we are near that area, as I found, that timing longer term tops with options is easier for the mind than trading futures, which I hold intraday only.

Of course the scenario calls for a High Failure Pattern at 171.50, meaning Euro-Yen should better drop below 169 until the end of the month or we have a close above a previous all time monthly high, which would make the 169 to 170 area a very strong support zone.

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