Analys från DailyFX

An Apparent False Retest in AUDJPY

Published

10 år ago

7 februari, 2014

DailyFX

Talking Points:

Break and Retest of Daily Trend Line
2 Distinct Patterns in Play for AUD/JPY
Key Zone for Initiating New Short Positions

As markets digest a worse-than-expected US non-farm payroll (NFP) announcement, the typical news-related volatility is beginning to create some attractive set-ups, the most interesting of which seems to be a false retest of a broken trend line in AUDJPY.

On the daily chart below, the pattern looks like a classic trend line breakout/retest set-up to all but the most observant. However, there are several other features of note on this chart:

The tail of the current daily bar coincides with the trend line break, and some would consider that a retest in and of itself. If this were true, then the move up to test the next declining line of resistance is already underway. However, there is reason to suspect that this may not be the case, as we will soon discuss.
The newly broken declining line of resistance was extremely steep. A break of a line this steep may result in a trend reversal, but it can just as easily develop into a slower downward trend.

Either way, there is at least some reason to believe that there is room for a short trade at this juncture in AUDJPY.

Guest Commentary: Classic Daily Breakout in AUD/JPY

The four-hour chart below shows the retest more clearly, and at this level of magnification, it is clear that the test was a knee-jerk reaction to the NFP report rather than a result of normal interaction between bulls and bears. That is one reason why some might consider this a false test.

Guest Commentary: Key Resistance Zone for AUD/JPY

Assuming this is, in fact, a false test, then the next step would be to work out a reasonable zone of resistance. The reversal zone projected for this move is based on the narrowing of the rising wedge pattern and previous support and resistance. The final zone has been determined as 91.98-92.79, which is an area 81 pips deep. Given that a move to the trend line would be more than 100 pips, this is satisfactory, although admittedly, this is not an ideal risk/reward situation.

Because of the risk profile, a precise entry is more important than ever in this particular set-up, and for that we turn to the hourly chart (see below).

The hourly chart is notable for the fact that the projected reversal zone occurs in an area that concurs with a pennant breakout projection. The pennant actually has a more optimistic upside target, but it is still within the trade plan.

Guest Commentary: Hourly AUD/JPY Pennant Formation

Given that either the four-hour wedge pattern or the hourly pennant’s projected target may materialize, it is wiser to simply take two or three trades as price arrives at this general area of resistance. Bearish reversal divergence, pin bars, and/or bearish engulfing patterns would all qualify as valid triggers for this trade.

The risk (per trade) on the hourly chart should average about 30 pips, which would make even a 100-pip move a nice trade.

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