Analys från DailyFX
An AUD/JPY Breakout Signal That’s Not as Good as It Seems
Talking Points:
- Misleading Pin Bar on AUD/JPY Daily Chart
- 2 Resistance Zones Clearly in Play Now
- Where and When to Consider AUD/JPY Shorts
One of the more popular strategies for end-of-day trading involves the pin bar, which many use to great effect. However, today’s intraday trade actually highlights a pin bar breakout on the AUDJPY daily chart that may not work out as well as longer-term traders may hope.
As shown below, the pin bar high has just been broken on the daily chart, and price appears to be happily on its way. However, there are two clear horizontal ranges in play on this time frame, and price is about to retest a roof. It may or may not break to the topside from here, but intraday traders could take their chances with countertrend trades here nonetheless.
Guest Commentary: 2 Daily Ranges in Play for AUD/JPY
If price reacts—and recent candles have reacted to this level many times—then there is at least potential for a scalp here, one that could turn into a longer-term trade if price heads lower. There are 70 pips to be had even to reach the rising trend line below, and if it breaks, it would signify a shift in the somewhat dubious-looking uptrend comprised of many overlapping swings.
The lower portion of the resistance zone on the four-hour chart (see below) is obvious, as it is simply the level that has recently held as resistance.
Guest Commentary: Key Resistance Zone for Selling AUD/JPY
To provide some room for error, a value approximately one-third of the current horizontal range has been added to the topside, giving an overall resistance zone of 95.18-95.47. This zone is 29 pips deep, which is a little large compared with the (conservative) potential 70-pip move to the trend line.
As a result, the better idea would be to trade this set-up using a trigger from the hourly chart, shown below. There are a lot of overlapping moves here, which suggests that the current upward move is being consistently challenged by sellers and is most likely not a trend move.
Guest Commentary: Ideal Time Frame for Taking This Trade
With that in mind, once AUDJPY touches resistance, short entries could be made using bearish engulfing patterns, pin bars, and/or bearish reversal divergence on this hourly time frame. As always, however, two or three attempts may be needed in order to successfully hop on to this move.
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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