Analys från DailyFX
An Intraday EUR/JPY Short with Ultra-Low Risk
Talking Points:
- Broken Uptrend on EUR/JPY Daily Chart
- Classic Short Opportunities Using Intraday Resistance
- Set-up Has Excellent Risk/Reward Profile
After a number of FX crosses proved quite profitable yesterday, including the GBPJPY set-up we covered here, the juicier trades have now shifted to the intraday arena. Although opportunities for initiating swing trades are temporarily scarce, they should be back in force within the next few days. For the time being, though, intraday trades are in play, and EURJPY is a pair of particular interest today.
As seen on the daily chart below, the momentum uptrend has been broken, and the trend line has been retested. Following classical trend line theory, price should now head towards the rising line of support due to a longer-term trend.
Guest Commentary: EUR/JPY Breaks Momentum Uptrend
Of course, it will likely have its hiccups along the way, and it may well be exhibiting one now, but this provides potential opportunities to hop onto a move. Considering that price is currently more than 450 pips away from the trend line, there is plenty of room for this trade to work. It is relatively straightforward when taking short trades at logical points of intraday resistance.
The four-hour chart below shows a declining parallel channel, with price now having pulled back to its upper quarter.
Guest Commentary: Declining Channel on Four-Hour EUR/JPY Chart
From here, all that remains is to fine tune an estimated resistance zone and decide on a trigger time frame for this entry.
As EURJPY has moved up 110 pips on the day (at the time of writing), it has more than fulfilled its daily average true range of 96 pips, and thus, resistance is likely just overhead. A tight zone has been estimated as a result, and in this case, it is 141.88-142.06.
Guest Commentary: Key Zone for Initiating EUR/JPY Shorts
This 18-pip zone should prove quite satisfactory for entering short given that the potential reward could be several hundred pips. The trigger will be seen on the 15-minute chart in order to provide added precision. Although the usual caveat that it may take two or three tries to get into this trade applies, it is not likely that more than two will be necessary at this point.
The 15-minute chart below shows a potential trigger already, as a pin bar is evident. (Other acceptable triggers would come in the form of bearish engulfing patterns and/or bearish reversal divergence.) Should the current candle move below the pin, it will be a valid trigger for an initial attempt at this trade.
Guest Commentary: Potential Trigger on 15-Minute Chart
Should the market cooperate, this will be a good entry into a countertrend move on extremely small risk. This is as it should be, since countertrend moves, by definition, are riskier. Position sizes should be adjusted to reflect the countertrend nature of this trade as well.
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
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.
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
-
Analys från DailyFX8 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter1 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter4 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX11 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX11 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Analys från DailyFX7 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter5 år agoTeknisk analys med Martin Hallström och Nils Brobacke
-
Marknadsnyheter6 år ago
Tudorza reduces exacerbations and demonstrates cardiovascular safety in COPD patients