Analys från DailyFX
Technical Analysis: Japanese Yen Looks Well Placed vs. USD, GBP
Talking Points:
- The past few sessions have seen a break higher for USD/JPY
- Even battered GBP/USD has seen some respite from a previously remorseless hammering
- But the signs aren’t great for bulls of either now
Find out what the trading community thinks of the Yen and all widely-traded major currencies at the DailyFX sentiment page
The Japanese Yen has seen key major rivals break higher against it in the past week or so.
And at face value these are good times for USD/JPY bulls, even though the pair looks to be headed for an end to the second calendar quarter which will put it more or less to the tick where it started back in March.
It has clearly broken a short-term downtrend line which had resolutely capped all attempts at a break higher since the peak of May 10 was reached at 114.30. That line snapped on June 15.
However, although the US Dollar has looked at least relatively comfortable above that line for about eight sessions, there must now be some doubts as to how strong the impetus to push on will prove, despite that audacious upside push.
It has already seemingly stalled in the 111.80 area. That could be highly significant. That area has also capped all attempts at a rise between mid-May’s sharp falls and the present day. If USD/JPY cannot push past itand take on the resistance levels now formed by the top of those falls, then it looks as though the downtrend will reassert itself soon enough.
One modest crumb of comfort for bulls may be that the market does not yet look significantly overbought. With a Relative Strength Index of 53, it’s not oversold by any means either. Unfortunately, this means that there is probably “gas in the tank” for a move either way.
The British Pound’s fortunes against the Japanese currency have been gloomy, with the vicissitudes of the Brexit story clearly prone to weigh broadly on it as formal negotiations get under way. That said GBP/JPY has broken out of an entrenched downtrend channel which had been in place since the peaks of May 10. Still, this is probably only a temporary jailbreak, with recapture by the downtrend all-but certain.
Key medium-term support is lurking not too far off at 135.59. That was the year’s low, made on April 17.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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