Analys från DailyFX

A Rare Range Trade in the Ever-Volatile GBP/JPY

Published

11 år ago

29 april, 2014

DailyFX

Talking Points:

Triangle Consolidation Pattern in GBP/JPY
Key Resistance Zone for Initiating New Shorts
2 Important Risk Factors to Consider Carefully

GBPJPY is known especially for its volatility, yet for most of this year, the pair has been consolidating in a triangle pattern, and today, price is heading higher as part of that triangle pattern and testing a very well-defined declining line of resistance on the daily chart.

This line of resistance is particularly powerful, as it is the site of four very clear prior touches. This is exceedingly rare in the forex world, and as this is the first break beyond this line, it is reasonable to suspect there will be sellers moving in on the assumption that the consolidation will continue.

Guest Commentary: Daily Triangle Consolidation in GBP/JPY

Whether the consolidation will materialize, of course, is anyone’s guess, but the most appealing trade at this point is certainly on the short side. A move to the bottom of the triangle could contain nearly 200 pips, if not more. However, one key risk is that the weekly trend (not shown) is still up. Nonetheless, with such a well-defined pattern, it is worth at least attempting a short while also understanding that doing so carries slightly-higher-than-normal risk.

The triangle pattern makes it somewhat trickier to estimate a zone of resistance, but there are two clues:

Price has already pierced the resistance line, and any capitulation should occur soon, and…
It is possible to derive an approximate zone of resistance based on previous highs on the four-hour chart below.

As shown, the final resistance zone emerges as 172.87-173.38. This zone is 51 pips deep, which still makes for attractive overall risk profile.

Guest Commentary: Key Resistance Zone for Selling GBP/JPY

The hourly chart below gives reason for pause, however, as it is exhibiting a relatively steep climb into the zone of resistance. In fact, it has already once interacted with it, giving a bearish engulfing candlestick that failed to turn the trend lower.

Guest Commentary: Contentious Signal on GBP/JPY Hourly Chart

Nonetheless, that bearish engulfing pattern sufficiently suggests the presence of sellers, even if they are not yet in control. However, this taken alongside the fact that the weekly chart is in an uptrend must be considered carefully when looking to short GBPJPY. As a result, it is best to wait for price to make a new high before trading any new reversal triggers, which would include bearish reversal divergence, pin bars, and/or bearish engulfing patterns on the hourly time frame.

This being the infamous GBPJPY, it may certainly take two or even three attempts to hop on this trade, which would work well should the pair turn swiftly downward.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

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

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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.

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

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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