Analys från DailyFX
Yen Trading Reminiscent of 2007 and another Market Divergence Signal
What a difference a week makes. Last week, long USD and stocks was a crowded trade. This week…the crowd got destroyed. Was it enough to press the ‘reset’ button on the US Dollar. Another EURUSD / USDCHF divergence suggests we pay close attention. We look to 2007 for clues on how to trade the Yen.
USDJPY
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Today’s USDJPY low came right at the May 2010 high and just 25 pips below a reaction low on 4/4. Funny enough, the high today was a few pips below the April 5th (an NFP day) high. The diagonal discussed last week, in which the USDJPY trades back to 90.84 before finding the next big low, remains possible. However, trading for the next few weeks, if not longer, may be within an already defined range (more on that 2 charts down).
Mark Twain remarked that “History doesn’t repeat itself but it does rhyme.” Considering volume (CME), the current situation may be similar to the week that 8/17/2007. Volume (see 1 chart down) that week was a record until this week. In both instances, volume was less than in previous weeks leading up to the low (USDJPY high) and the turn was accompanied by significantly increased volume. After the 2007 record volume week, the Yen traded in a 2 month range of mostly 113 to 117. It’s impossible to predict with accuracy what will happen but the information presented paints a picture of what could happen. That is, the current situation ‘rhymes’ with August 2007 and short term range trading at specific levels may be the best approach.
FOREX Trading Strategy: See 2 charts down.
Yen Futures (CME)
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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USDJPY
Hourly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREX Trading Strategy: After a Friday reversal on a huge volume at a huge level following NFP, the USDJPY is ending the week at near term resistance (underside of former downward sloping trendline) and I am looking for an early week low to get long. Thursday’s close at 96.97 and the 1pm (EST) close on Thursday at 96.62 (large volume hour) are estimated support. Estimated resistance is 98.85 (former low), 99.71 and 100.45 (the last 2 levels are beginning of accelerated declines…expect responses from these levels especially). Look for spikes into mentioned levels during market opens (Tokyo, London, New York), option expiries (10 am EST), and on news for opportunities to fade. A more detailed description of how to trade this was described during Friday’s webinar.
EURUSD
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Thursday felt like forced liquidation and I’m wondering if an important USD low is in place. EURUSD resistance is from the May 2012 high, the December 2012 high, the first day of the year high, and the 2/25 large range high. The rally from the April low consists of 2 equal waves and channels in a corrective manner. Volume (CME) on this move was the largest since 8/2/2012 (see next chart). The USDCHF / EURUSD divergence is in place as long as the USDCHF is above .9205 (explained in the webinar).
FOREXTrading Strategy: Pending short
Euro Futures (CME)
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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USDCHF
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Are you new to FX or curious about your trading IQ?
FOREXAnalysis: The USDCHF rallied for 22 weeks off of the 2011 low (8/12/11 to 1/13/12) and has traded sideways for the last 73 weeks. Consolidation has lasted 3.3 times (73/22) longer than the previous trend. This week’s low was registered at the topside of a trendline that extends off of the 2010 (June) and 2012 (July) highs. In light of the divergence with EURUSD, one can make the case for a major USDCHF low.
FOREXTrading Strategy: Pending Long
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
Subscribe to Jamie Saettele’s distribution list in order to receive actionable FX trading strategy delivered to your inbox.
Jamie is the author of Sentiment in the Forex Market.
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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