Analys från DailyFX
Yen Trading Prospects and Pitfalls
Traders looking to capitalize on persistent yen weakness should likely target one pair in particular, staying cautious around some clearly defined technical exhaustion levels in the process.
While looking to take advantage of Japanese yen (JPY) weakness, the USDJPY makes the most sense in terms of base currency strength. Most of the pairs trading against the JPY have weakness on the other side, making for more of a footrace set up for which JPY weakness may have to compete with weakness from the other currency. The AUDJPY is a classic example of that scenario.
The potential for USDJPY follow-through to the upside this week depends on Fed Chairman Ben Bernanke’s two-day testimony before Congress. It’s a risk-appetite move any way you slice it, and the pair has the chance to fire on both cylinders by way of simultaneous yen weakness and US dollar (USD) strength. The problem, however, is that the daily chart is choppy and prices are closer to a fade (short sell) off the 101.50 level.
The flip side of the 101.50 resistance is that it’s the same decision level a momentum buyer could consider on a breakout buy. For now, it is oversold resistance and likely to hold until Wednesday when Bernanke’s testimony begins.
Since the 34-period exponential moving average (EMA) wave is still traveling sideways at “four to six o’clock,” I will consider this a market environment that is (technically) set up to exhaust along range extremes.
Two likely exhaustion points are higher resistance levels, one of which is the 52-week USDJPY high at 103.72, and the other being the AUDJPY uptrend line support sitting just above the 94 handle. I’m looking for continued range-bound action until the Dow rallies through 15,500 and the US dollar index accelerates through 85.00.
By Raghee Horner of TradeForexFutures.com
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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