Analys från DailyFX

A USD/JPY Short That’s Playing Nice

Published

11 år ago

13 december, 2013

DailyFX

Talking Points:

Key Intermarket Factors for USD/JPY
Classic Elliott Wave Patterns at Work
Step-by-Step Parameters for This Trade

Before we look to set up any trade in the FX markets, we like to identify in which “sandbox” our currency pair is playing. What I mean by that is which markets, currencies, or other assets correlate to our FX trade.

Today’s set-up is in USDJPY, and as the intermarket overlay chart below clearly shows, the pair is playing in the sandbox with both SP futures and Nikkei futures.

Guest Commentary: Key Intermarket Correlations for USD/JPY

Looking closer at the chart above, you will see all three markets were playing nicely together right up until fall 2013, when the SP 500 broke higher and left USDJPY and the Nikkei behind. Only in the last week has the SP begun to be reeled back in.

This is quite interesting as we head into the key Federal Open Market Committee (FOMC) meeting, and if we do get an announcement about Fed tapering, it would go a long ways toward further closing this gap.

The SP is trading with a weak tone at present, and at the time of writing, I’m watching the Nikkei futures drop.

The three-hour chart of Nikkei futures (see below) is tracing out a white, “a-b-c” decline (see circles) that has an immediate downside target of 15,235, or the A-wave low. More than likely, that level will be exceeded and sellers will make an attempt at the 15,065 low.

Guest Commentary: Nikkei’s Classic Elliott Wave Price Action

From current levels, that calculates to an approximately 3% decline from current levels. If the SP were to decline 3% from its current level near 1775, it would result in a move to around 1722, which is close to the September 18 high.

Referring back to the intermarket correlation between USDJPY, the SP, and the Nikkei, if those stock indices were to fall, you can be quite sure that we’ll see USDJPY move lower as well, regardless of what happens with the FOMC meeting on December 18.

Looking to the USDJPY chart below, we see USDJPY is also projected to move lower in as part of wave c (in yellow) to around the 101.00 handle. Using the Elliott Wave principle, this c-wave should sub-divide into a five-wave structure. So far, wave 1 looks to be complete, and a wave-2 correction is pending, which will present our trading opportunity.

Guest Commentary: Short Set-up in USD/JPY

Short Set-up for USD/JPY

Trade: Sell USDJPY at the 50% retracement of the wave-1 decline at 103.45
Stop loss: Place stop just above the wave count invalidation of 103.92
Take profit: Initial take profit is the December 11 low of 102.15

More: For more candid, in-depth analysis on USDJPY, check out this video explaining the basis behind this trade.

By Todd Gordon, founder, TradingAnalysis.com

Receive three free months of premium trade signals and analysis by visiting TradingAnalysis.com.

Disclaimer: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors.

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