Breakout Alert: Three Yen Crosses Ready To Rip

From the Desk of Ian Culley @IanCulley

Commodity currencies are edging higher.

But given the preceding dollar rally, significant breakout levels lie well out of reach.

In the meantime, we can turn to the yen for actionable ideas.

One yen cross is already breaking out!

Check out the aussie-yen cross challenging multi-year resistance at approximately 98.50:

That’s a tradeable level marked by the 2022 high and the June and September peaks from last year.

Buyers are on the verge of cracking this key level as I write. If and when they do, I like it long with a target of 111.15 over longer time frames.

Long AUD/JPY comes with a positive carry. So I’m happy to give this position adequate time to reach our upside objective as long as price holds above our risk level.

The same applies to two additional trade setups…

Here’s the Canadian dollar-yen:

The CAD/JPY looks quite similar to its aussie counterpart.

A shelf of former highs delineates our breakout level at roughly 111.75. An upside resolution above those former highs flashes a buy signal with a long-term target of 126.50.

I’m tracking an overbought reading on the 14-day RSI for confirmation of potential breakouts.

The kiwi-yen rounds out today’s trade ideas.

Yesterday, the NZD/JPY completed a classic running wedge pattern. The path of least resistance points higher toward 100.00, but only if it trades above 92.25.

I’m currently long, preferring to trade this cross due to its momentum profile and relative strength. (NZD/JPY is printing fresh nine-year highs while the CAD/JPY and AUD/JPY are still trading below multi-year resistance levels.)

The US Dollar Index $DXY is taking a breather following an impressive six-week rally. Buying other major currencies against the USD is a bit cute, given the dollar’s recent strength.

On the other hand, interest rates remain elevated. And the carry trade is alive and well… so trade the yen.

The setups are there, providing well-defined risk levels and outsized risk-to-reward opportunities.

I can’t ask for much more.

Are you buying these yen crosses?

If not, what’s holding you back?

-Ian

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