Analys från DailyFX

A NZD/JPY Set-up That’s the Best of the Bunch

Published

11 år ago

4 november, 2013

DailyFX

Talking Points:

Divergence Signals Potential for Reversal
2 Most Likely Scenarios for NZD/JPY
The NZD/JPY Entry Signal to Watch for

Most major currencies are consolidating and taking their breaths after last week’s major moves. This would normally mean a better market for the crosses, but in this case, the moves have confused those markets as well. In light of that, the takeaway is clear: Trade with caution.

That said, the best response to this environment is to continue to take trades, knowing that although they have lower probability, the price of not taking them could well be missing the one trade that does shoot in our direction. It’s my belief that NZDJPY could be that one favorable trade scenario.

As shown below, the weekly chart of NZDJPY is an uptrend, and the most interesting thing about this chart is the divergence that formed two weeks prior.

Guest Commentary: Bearish Reversal Divergence in NZD/JPY

The large bearish engulfing candlestick is also indicative of some possible downward momentum. Since that original signal, we have not had any bearish candles on the weekly time frame. Given that a bearish reversal divergence scenario should generally produce sideways to bearish price action for the next few bars, this suggests that we may stand to catch the high of this week’s bar, and wouldn’t it be nice if it turned out bearish, too?

On the daily chart (see below), there are two scenarios that are most likely to develop from this point on, although that’s not to say that they are the only possible scenarios.

Price goes to test the underside of the broken trend line and then races down to test the longer-term trend line
Price ignores the trend line and goes into a range type of motion before continuing on its way

Guest Commentary: The 2 Most Likely NZD/JPY Scenarios

Again, there is a multitude of other possibilities, but these two show extremes of what could go right with this trade and what could go wrong. It is highly dependent on the weekly chart’s reversal divergence coming back into force.

As always, uncertain trades call for hair-trigger entries, and for that, it pays to use the lower time frames.

The four-hour chart below provides a set of resistance levels that, when taken together, form a zone. Two levels were taken off pin bars from the previous upward move, as marked. The resistance in between them is the 50% Fibonacci retracement level. Together, these levels should form a zone at least strong enough to cause a reasonable reversal on the hourly charts.

As a bonus, the Stochastic is overbought, as price is heading up to the resistance zone, allowing for reasonable downside.

Guest Commentary: The NZD/JPY Entry Signal to Watch for

The trade should be taken on the hourly chart as price gets into the price zone and shows signs of slowing down, usually through some form of reversal divergence.

In these markets, the wise thing to do would be to divide the trade into a short-term position and a long-term position. The short-term trade should be taken off at the first sign of trouble on the hourly charts, and the longer term trade—once risk has been reduced or eliminated through the short-term component—should be trailed less aggressively in hopes of possibly catching a very large move, should it develop.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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