Analys från DailyFX

Dual Breakouts in Play Right Now in CAD/JPY

Published

11 år ago

25 april, 2014

DailyFX

Talking Points:

2 Breakouts on CAD/JPY Daily Chart
Consolidation Pattern Key Support Zone
The Ideal Time Frame for Initiating New Longs

Trend line analysis can usually be done in a straightforward yet powerful manner. However, on occasion, there arises the potential for interesting combinations, and today’s trade is one such example.

As seen on the daily chart below of CADJPY, the original downtrend was broken at the end of March. As the rising channel shows, the expectation was that an uptrend could have developed. However, the latest break of the rising support line suggests either that the downtrend could be resuming, or that a larger consolidation area is developing.

Guest Commentary: Dual Breakouts on CAD/JPY Daily Chart

Regardless of whether it is starting a downtrend or simply a consolidation, price is expected to at least test the underside of the trend line before confirming that the uptrend has truly ended. Thus, the most immediate trade is to the long side. If the break turns out to be false, then there could well be a journey of 250 pips or more to retest the highs. If it proves true, however, there would be more than 60 pips before price tests the trend line again.

The four-hour chart below offers a slightly different perspective on this trade, as it sketches out a sideways consolidation. The depth of this range is approximately 90 pips, which leaves plenty of room for long trades to unfold.

Guest Commentary: Key Support Zone for Buying CAD/JPY

The chosen support zone is defined as 92.10-92.37, and it is actually an interesting study in itself. The higher value is the approximate area of the recent lows. However, the best trade would actually occur if price dips slightly lower than the recent low, creating ”head-fake” scenario.

By textbook theory, this would cause the bears to begin selling on the breakout. Should price then turn back up, the momentum generated by sellers hastily covering their positions should help springboard price back up to (perhaps quickly) test the top of the range.

The hourly chart below is notable for how featureless it is in relation to the other patterns. Besides a potential declining channel, there is little to be said for this decline. This is worth noting, as it means that many of the recent swings have overlapped with one another.

Guest Commentary: Ideal Time Frame for New CAD/JPY Longs

Even though the general movement has been mildly bearish, it essentially shows a market that could develop into a trend rather suddenly. Of course, it is hoped that this trend will be in the upward direction, but it could also be to the downside. As there is no way of telling until history is created, the best response is to trade the long side on signs such as bullish reversal divergence, bullish engulfing patterns, and/or pin bars on the short-term time frames.

Risk is likely to be quite small for this trade given that the average candlestick is approximately only ten pips deep at this hourly level of magnification. This certainly helps to justify taking this trade, and also justifies taking two or three tries at the entry in order to successfully capitalize on a potential upside move.

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

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

8 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

8 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

8 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