Analys från DailyFX
2 Very Good Reasons to Buy SGD/JPY
Talking Points:
- 2 Factors That Make SGD/JPY Longs So Attractive
- Percentage-Change Analysis of Key JPY Pairs
- Step-by-Step Parameters for Taking This Trade
The Japanese yen (JPY) has been weak against most key currencies for many months now, and with this trend still active, we’re keen to buy select counterparts against JPY. To select which pair, however, we’re looking for two things:
- A pullback within a favorable Elliott Wave count, and…
- Knowledge that we’re buying a currency that has shown consistent strength against the Yen.
Using those guidelines, our top choice right now is actually to buy the Singapore Dollar (SGD) versus the Yen, or in other words, go long the SGDJPY pair.
The hourly chart of SGDJPY below shows our impulsive Elliott Wave count from the December 18 low of 81.44. It starts with a sharp,130-pip rise to 82.75 (blue wave i). This was followed by a zig–zag correction to 81.95 (blue wave ii).
Guest Commentary: Strong Case for Buying SGD/JPY
Typical of second waves, the pullback ended at an almost perfect 61.8% Fibonacci retracement of the impulsive rise. Price then rose impulsively in yellow wavei, reaching 83.06 (being one smaller degree). From here, if 83.06 holds, we’ll then see price pull back in yellow wave ii, and we’d expect at least a 50% retracement.
Therefore, we’d look to buy SGDJPY just above this 50% retracement level, at 82.60. We’re placing a stop just below the 78.6% retracement at 82.10, producing a 50-pip stop. Those who are more conservative may prefer to place their stop at 81.94, which is where the Elliott Wave count is “wrong.”
To make this trade worthwhile from a risk/reward perspective, we’d need to achieve a target at least 50% larger than the size of our stop (i.e. at least 75 pips). Based on the first two blue waves, we could reasonably expect blue wave iii to end above 84.00, being that it is the 161.8% extension of these two blue waves. As the rise has been strong over the past few months, it’s unlikely that this is a corrective move.
We’ll look to set two profit targets, the first of which will be 83.60, 100 pips from the entry point while risking 50 (i.e. risk $1 to make $2). The second take-profit position is 83.85 (125 pips beyond entry), which risks $1 to make $2.50. Both take-profit positions provide very healthy risk/reward ratios and are below the 84.00 level.
Further Validation for Buying SGD/JPY
Most key JPY pairs made significant lows in early October. The below percentage-change chart shows the increase in the key JPY pairs since that time, and this chart goes a long ways toward validating this long SGDJPY trade idea.
Guest Commentary: Yen Weakness Prevails Across the Board
For example, we may have a favorable Elliott Wave count inAUDJPY, but this chart would warn against buying that pair because it has had the least percentage increase of the key JPY pairs since early October (just 2% relative to the other key currencies).
Meanwhile, SGDJPY appears in the middle of this list with a healthy rise of about 7% (compared to the strongest JPY pair, GBPJPY, which returned 12% during this time).
Potential Long-Entry Opportunity in SGD/JPY
- Trade: Buy SGDJPY at 82.60
- Stop Loss: Place stop at 82.10
- Take Profit: Take half profits at 83.60, and let the remainder of the trade run to 83.85
- Trade Management: Move stop to 82.60 if price reaches 83.60
By Todd Gordon, founder,TradingAnalysis.com
Receive three free months of premium trade signals and analysis by visiting TradingAnalysis.com.
Disclaimer: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors.
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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
-
Analys från DailyFX8 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter1 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter4 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX11 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX11 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Analys från DailyFX7 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter5 år agoTeknisk analys med Martin Hallström och Nils Brobacke
-
Marknadsnyheter6 år ago
Tudorza reduces exacerbations and demonstrates cardiovascular safety in COPD patients