Analys från DailyFX
EUR/JPY Technical Analysis: 123.08 Fib Resistance In-Play
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Talking Points:
- EUR/JPY Technical Strategy: Flat. Aggressive short setup identified.
- EUR/JPY staged a strong break lower after the BoJ’s ‘no move’ at their last policy meeting.
- If you’re looking for additional trade ideas, check out our Trading Guideand if you’re looking for shorter-term ideas, check out our SSI indicator.
In our last article, we looked at the young but bullish structure that had begun to build in EUR/JPY; but as we advised, traders would likely wanted to approach with caution given the Bank of Japan meeting on the docket for later in the week. And that meeting did not disappoint. Nothing really happened; no new policies were unleashed and no new announcements were made, but that was somewhat of the issue. Markets were looking for some kind of extension or increase to Japanese QE and after the incredibly salient report had made the rounds a week earlier, it looked like something new would be announced.
But when no additional information was unveiled by the Bank of Japan at that April rate meeting, that bullish structure in EUR/JPY was smashed by a surging Yen.
Price action made some very interesting moves around this theme, and these levels can certainly become usable again. The low on Friday and again on Monday of this week was but a few pips below the previous swing low at 121.70. Sellers tried to take the pair lower yesterday but, again, support came into play to offset the selling pressure, and now EUR/JPY is catching resistance off of another familiar level at 123.08, which is the 38.2% Fibonacci retracement of the ‘secondary’ move in EUR/JPY, which takes the 2008 high to the 2012 low).
This could open the door for aggressive continuation setups with stops placed above today’s high of 123.50 (such as 123.65-123.70), and targets cast towards that previous zone of support below 122. Traders can also break up the exit by removing a portion of the position should 122 come-in, moving stops to break-even and looking for more profit on the remainder of the lot. Should Non-Farm payrolls bring on even more risk aversion, traders could cast deeper targets towards the 120 psychological zone with a scale-out approach.
Created with Marketscope/Trading Station II; prepared by James Stanley
— Written by James Stanley, Analyst for DailyFX.com
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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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