EUR/JPY Prints 12 Year Lows

Selling off for 8 days in a row, the EUR/JPY has been getting pummeled by the Greek tragedy and the Pain in Spain, which now (the latter) seems to be taking center stage. We checked the data and 8 days is the max consecutive selling days this pair has printed over the last 12 years. It has only done this (8 days of consecutive selling) 2x in history, today completing the 2nd time. It has also spent 24 consecutive candles below the 20ema with no touches (longest is 36). Thus, we are getting into over-extended territory, at least on the consecutive bear candles side.

But records are made to be broken, and if there was ever a time, this would be the year for the EUR to sell more vs. the JPY.  With that being said, we prefer selling, but would rather wait for a pullback.  Aggressive intra-day players can wait for a breakout pullback setup to the 97 handle which was the yearly lows. Less aggressive players can wait for a pullback to the 4hr pin bar rejection off 98 earlier today, or a slightly deeper pullback to 99.42.  But until a silver bullet comes out for Europe (which we do not see), sell on rallies is the mantra targeting 95.83 (April 2000 lows) and 94 (May 2000 lows).

Global Market Commentary:
The Pain in Spain continues as the government admitted it has till October to raise €19B just to rescue Bankia (but, but…it was solvent you said). In other words, Bankia is down and may not get up for the standing 8-count. Keep in mind, this is just one of its top 6 banks. Add the others up and its above €42B.  They have also admitted a 3yr rescue loan for Spain could total €300B+. Only a Schrodingers Cat move by the IMF or ECB will be able to come up with that, but we are seeing how Greece is nothing compared to Spain.

Needless to say, the euro was under pressure and had its worst monthly performance since September 2011 while every major index except for the FTSE and CAC ended up in the red. The Dow also had its worst monthly loss in 2yrs. Expect this to continue but keep in mind, during markets like these are some of the best times for traders to make money. Traders should take note of the upcoming NFP tomorrow so cautious moves prior to the release are suggested.