Analys från DailyFX
USD/JPY Technical Analysis: 2017 Lows Worryingly Near
Talking Points
- The US Dollar remains stuck in a long downtrend against the Japanese Yen
- Sterling is in a similar predicament
- There’s not much between current levels and 2017’s lows, bulls have much to do.
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When looking at the Japanese Yen daily charts, it’s hard to avoid the feeling that something has to break soon, at least for the USD/JPY pair.
It has been wandering around quite inconclusively for fully 20 trading sessions since the big falls of May 16 and 17.
In so doing it has drifted toward the year’s lows, but not touched them, while at the same time mounting no significant upside challenge whatever to the 113.00 level. That’s where key resistance formed by the year’s persistent downtrend comes in.
Clearly the Dollar is closer to those 2017 lows than it is to the top of that downtrend, which will need to be recaptured if the pair is to make any consistent upward progress. However, assuming that bulls have the appetite to even try for that, there are one or two resistance levels which they are going to have to conquer first.
They’ll include June 1’s closing high at 111.34 and the 111.74 level. That has quite efficiently contained gains since that May 17 fall and may prove tough.
But if even those relatively modest rises prove too much for any daily push (and don’t forget the pair is only at 110.20 or so right now), then it looks very much as though the USD/JPY downtrend will endure, with another test of the year’s lows all-too likely.
In the aftermath ofthe UK general election, it perhaps behooves us to take a look at the British Pound.
Given the shock result of that vote, with a seemingly secure government failing to secure a majority, GBP/JPY has been perhaps eerily calm. The cross remains in a clear, short-term downtrend, of course. But that has been in place since May 10 and hasn’t notably accelerated in recent days.
Assuming it endures, the British Pound is admittedly at least short of obvious support as USD/JPY until we come to the year’s lows. These are lurking not very far away from current levels, at 135.59. While it would be rash to rule out a test of these in due course, it doesn’t so far appear to be coming notably faster than it was before Friday’s vote news.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
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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