Analys från DailyFX
USD/JPY Advances in Impulses and Corrects in Three’s
USD/JPY has been advancing in impulsive fashion while correcting lower in three waves. This behavior is typical of a market in an uptrend.
The 2012 low to 2015 high was a five wave impulse, followed by a correction and partial retracement to the August 2016 low.
The August 2016 low to the December 2016 high was a five wave impulse, followed by a three wave correction and partial retracement into the April 2017 low.
The April 2017 low to the May 2017 high is a five wave impulse, followed by a three wave correction and partial retracement into the June 14 low (pictured below).
Since then, USD/JPY has rallied in five waves again. Therefore, we will be looking for a three wave correction that is a partial retracement of the five wave rally.
The key level to watch to the downside is the June 14 low near 108.80. This is the point where a new five wave impulse begins. Therefore, we are anticipating a correction of the current impulse to be a partial correction and hold above 108.80.
Typical stopping points for a correction lower include the range bound between 38.2% and 61.8% of the previous uptrend. That places a potential pivot zone between 109.93 and 110.65.
If correct, the next leg higher may run 300-500 pips. You see, the June 14 advance was nearly 300 pips. Since we have a new trend starting with a five wave sequence, we will look for another advance of similar or Fibonacci proportions. That means the next leg higher could be between 300 and 500 pips long.
IG Client Sentiment shows traders have been shifting net long over the past 24 hours pushing the sentiment reading to +1.84. A shift towards net longs on increasing price is a bearish undertone. Therefore, sentiment lines up with the Elliott Wave model suggesting we may see a dip of prices coming soon. As mentioned above, we are anticipating this dip to be a partial retracement of the June 14 up trend. Learn how to trade with sentiment with our IG client sentiment guide.
Do you find USD/JPY movements confusing? Read our Japanese Yen quarterly forecast.
—Written by Jeremy Wagner, CEWA-M
Discuss this market with Jeremy in Monday’s US Opening Bell webinar.
Follow on twitter @JWagnerFXTrader .
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EUR/USD has stalled. Where might we be in the Elliott Wave cycle? Read more on my EURUSD analyst pick.
Read the recent Dow Jones Elliott Wave article.
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
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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