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At 61.20 with a stop loss at 62.80 and a minimum 57.70 target and possibly as far as 55.00

NZDJPY- daily chart
• Recent up move is very “wedge-like” (corrective) in nature and has held strong resistance in the 63.40-40 area.

• This peak has been hit with triple momentum divergence on the daily chart.

NZDJPY


• Has posted a marginal 76.4% high in the recent bounce. This is very similar to the pattern seen in April before lower again.

NZDJPY-Weekly chart


• Rally has hit and so far held the 55 week moving average resistance

NZDJPY 3 month implied volatility


• As with the NZDJPY chart this pattern is very wedge-like and trying to turn up

NZDJPY 3 month implied volatility and NZDJPY(Inverted)


• Divergence between price and volatility has normally been resolved with price catching up.

NZDUSD- daily chart


• Held very good resistance around .6555-.6570 and is now testing the support range between .6080 and .6180
• Below here would suggest accelerated losses

NZDUSD 3 month implied volatility


• Has held very good support and is starting to turn up.

NZDUSD 3 month implied volatility and NZDUSD(Inverted)


• Again volatility and price are diverging

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USDJPY-Daily


• Came back to strong trend line resistance on 5th June and has turned lower
• The downside bias for below 90.00 remains here.

USDJPY 3 month implied volatility


• Has held good support and is trying to move higher.
USDJPY 3 month implied volatility and USDJPY(Inverted)


• Volatility led the bounce in USDJPY. Déjà vu?
• It also led the turn lower in USDJPY in early August 2008.

USDJPY and the 10 year note


• The 10 year note has just hit the same trend line that comes off the June 2007 and October 2008 lows.

• In both those prior instances USDJPY started to fall not that long after.

o In both 2007 and 2008 the peak in 10 year yields took place on 13th June. While we can confidently say that will not happen a 3rd time in a row (As the 13th June is a Friday this year) there is a danger that a correction lower in long end yields may not be that far off.
o The peak in 10 year yields in 2006 was June 28th
o In 2005 they fell 27 basis points between the 15th and 27th June
o In 2004 the 4.90% peak was set in late May but the sharp fall in yields came from the bounce to 4.88% that peaked on 14th June
o In 2003 the trend low at 3.06% was posted on 16th June.

• So for 6 years in a row we have had a move against the trend in mid to late June. In 5 of these instances we saw a very sharp move in the opposing direction in the following weeks/months. In fact 2005 was the only year where the pivotal level off which yields turned in June was even seen again in the remainder of the year.