Analys från DailyFX
EUR/JPY Technical Analysis: Higher Highs for Bullish Continuation
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Talking Points:
- EUR/JPY Technical Strategy: Near-term trend with bullish prospects.
- EUR/JPY printed a higher-high yesterday, breaking a batch of resistance that held for over two months, and this opens the door for bullish continuation in the pair.
- If you’re looking for trading ideas, check out our Trading Guides.
In our last article, we looked at a batch of resistance sitting just above price action at the time. Fresh on the heels of the U.S. Presidential Election, EUR/JPY put in a quick-break of support at the 114.11 level before reversing aggressively and running up to resistance. But given the fact that surging prices had been twice-rebuked at this zone of resistance over the past 2 ½ months, traders would likely want to wait for further confirmation of bullishness before looking to add exposure.
The level that we’ve been watching for that bullish indication was at 117.13. This is the 61.8% Fibonacci retracement of the ‘Brexit move’ in the pair, and this same Fibonacci retracement’s 38.2% level had helped to carve out prior support at 114.11. With prices moving up to, and catching resistance off of this higher-high, the door opens for bullish continuation setups; and at this point, traders can look for the ‘higher-low’ in the effort buying support in an up-trend.
On the chart below, we’re looking at two potential areas to begin watching for that next ‘higher low’ to print. The prior batch of resistance can be an opportune level for such an observation, but given the amount of ‘whipsaw’ that was seen around resistance, a further break lower may be in store and the zone between 115-115.62 could also be an attractive zone for ‘higher-low’ support to develop.
Should price action break below 115, traders will likely want to question the prospect of bullish continuation, and should the election swing-low at 113.70 become broken, the bullish bias can be abandoned altogether, at least for now.
Chart prepared by James Stanley
— Written by James Stanley, Analyst for DailyFX.com
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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
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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
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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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