Analys från DailyFX
A CAD/JPY Pattern Two Years in the Making
Talking Points:
- ”Perfect” Elliott Wave Pattern in CAD/JPY
- Start of a New Daily Uptrend
- Key Support Zone for Buying CAD/JPY
Kaye Lee is enjoying holiday for the week ahead and new articles may appear less frequently during this time. The normal publication schedule will resume shortly after April 10.
Textbook Elliott wave patterns are relatively rare, and even more so on weekly charts, where formations take months or even years to develop. Nonetheless, CADJPY appears to have recently completed a classic eight-wave pattern, as shown on the below weekly chart.
Guest Commentary: “Perfect” Elliott Wave Pattern in CAD/JPY
The usual assumption is that the current uptrend will continue, although depending on various other observations and interpretation, conclusions ultimately may vary. Nonetheless, there is already some evidence that bullish momentum is in play for CADJPY.
While it is too late to enter at the bottom of the c wave (unless trading on the weekly time frame), a continuation trade may well be feasible. Even if price only retraces half of the A-B-C downward movement, there would be at least 250 pips of potential movement. For an hourly trade, that should be more than sufficient to provide good overall risk profile.
The daily chart below shows that a declining line of resistance has been broken and retested, and thus, the upward swing should have begun. As such, it is simply a matter of entering this move at a reasonable zone of support on the lower time frames.
Guest Commentary: New Daily Uptrend in CAD/JPY
The support zone is somewhat more difficult to determine, but considering previous zones of support and resistance offers sufficient evidence that there is a cushion at 92.79-93.33. This zone is 54 pips deep, which more than satisfies the all-important risk parameters.
Guest Commentary: Key Support Zone for Buying CAD/JPY
Nonetheless, it would be wiser to take this trade on the hourly chart (not shown), where risk can be mitigated even more.
Viable trade triggers include the usual suspects: pin bars, bullish engulfing patterns, and/or bullish reversal divergence on the hourly chart of CADJPY. As always, two or three attempts may be necessary to get in on this set-up.
By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com
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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