Analys från DailyFX
USD/JPY Technical Analysis: Sharp Retracement Faces Big Test
What can traders expect from USD/JPY in a year of US rate hikes? Here are our thoughts.
Talking Points:
- USD/JPY technical strategy: anticipating a hold 110 on closing basis
- Breakdown 110 could signal further JPY strength on the near horizon
- 100% upside- extension of Andrew’s Pitchfork set as key trend resistance
JPY strength has been a major headline this week as political turmoil from the US to Brazil helped take trader’s attention away from the low-volatility Bull market. The risk-off bid was felt around markets as Gold (a classic risk-off instrument), and US Treasuries saw their largest gains of 2017. However, despite the have flows pushing USD/JPY below 111, it’s worth keeping an eye on signs of a reversal higher. If the reversal higher takes place, we could see a resumption of JPY weakness much like we’ve seen over the last month. It is also worth noting that a lack of a bid in USD/JPY could spell doom for the Bulls as many DXY longs could look to soon liquidate their position.
Make no mistake, USD has been weak lately. Luckily for USD/JPY bulls, JPY has been weaker on a relative basis, at least until this week. Thursday is seeing of the USD/JPY’s biggest drop since November, and as long as 110 holds, we could see brave buyers step in before the overall trend resumes. To get a sense of what’s likely, there are a few levels worth watching.
On the chart below, you can see the price action from April take out the top of a bearish falling channel (Andrew’s Pitchfork) that contained the price for most of the year. Now, we appear to be testing the top of the channel as support. The top of the channel and the recent stall in downward price action can be found at the 61.8% retracement level of the April-May range. While deep, a 61.8% retracement is appropriate within an uptrend. Below the 61.8%, retracement of the April/May rise is the 200-DMA at 109.73.
A hold of price on a closing basis above 110.51, the 61.8% Fibonacci of April/May rise, and the 200-DMA would likely signal a deep set-up in a trend set to continue. A break above Wednesday’s high at 113.12 would further encourage that view that the Bull trend is likely set to resume higher. A break below the 200-DMA, on the other hand, would be a clear indication that a move to new 2017 lows below 108.13 is likely soon approaching.
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Chart Created by Tyler Yell, CMT
USD/JPY IG Trader Sentiment: Yen Rallies Giving Bearish Signal Based on Sentiment
What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!
USDJPY: Retail trader data shows 58.0% of traders are net-long with the ratio of traders long to short at 1.38 to 1. The percentage of traders net-long is now its highest since Apr 26 when USDJPY traded near 111.197. The number of traders net-long is 12.4% higher than yesterday and 10.0% higher from last week, while the number of traders net-short is 23.5% lower than yesterday and 24.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias. (Emphasis Mine)
The takeaway from me for IG Client Sentiment on USD/JPY is that longs are getting more aggressive on a daily and week-over-week basis. In taking a contrarian view, this opens up the likelihood of further breakdown continuing Wednesday’s price action. A break below Wednesday’s close and the 200-DMA with this sentiment picture holding could precede an aggressive breakdown.
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Shorter-Term USD/JPY Technical Levels: Friday, May 12, 2017
For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.
Written by Tyler Yell, CMT, Currency Analyst Trading Instructor 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
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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