Analys från DailyFX
GBP/JPY Technical Analysis: Back and Forth, Buyer Support
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Talking Points:
- GBP/JPY Technical Strategy: Intermediate-term: Bullish. Near-term: mixed.
- GBP-pairs hurdled lower after the BoE’s Super Thursday, in which the bank lowered inflation forecasts for 2017 while increasing GDP-growth forecasts for the year by 42% (to 2% from a prior expectation of 1.4%).
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In our last article, we looked at the return of bullish price action in GBP/JPY after an outsized retracement of the previous bullish-move. And that prior bullish move was significant, as GBP/JPY rallied-higher by more than 2,100 pips from the election-night lows, setting a new near-term high at 148.45 in mid-December that has yet to be re-approached. This led-in to a retracement of more than 1,100 pips, with price action finally finding support at the 50% retracement of the post-Election move, at which point buyers returned to run the pair back-above ¥140.00. I realize that this is quite a bit of back and forth; on the chart below we’re looking at what is, in essence, congestion after a really strong move-higher.
Chart prepared by James Stanley
To simplify all of this recent back-and-forth price action in GBP/JPY, the daily chart below strips away all of the above denotations to, instead, focus-in on a building wedge formation on the daily chart.
Chart prepared by James Stanley
Given the veracity of the prior bullish move, with price action remaining supported above the 50% retracement of the predominant ‘post-Election’ trend; the top-side of the pair can remain as attractive. Of particular note was this week’s price action, in which GBP/JPY saw an aggressive bounce above the ¥140.00-handle ahead of the Bank of England’s Super Thursday. After the BoE took inflation forecasts lower, sellers took control of GBP, driving GBP/JPY right back down to the prior zone of support around 140.82. But after a slight drive below the prior low, buyers have returned to push prices-higher.
Chart prepared by James Stanley
This can open the door for bullish approaches, with the zone of potential support around 139.50 being an ideal area to investigate for stop placement. For those that want to take a more conservative stance towards bullish approaches on GBP/JPY, a print above ¥142.00 would denote a short-term ‘higher-high,’ at which point traders can look to catch the next higher-low in the pair with a bit of additional confirmation that bulls may be able to continue driving the pair-higher.
— 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
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You can follow Paul on Twitter at@PaulRobinonFX.
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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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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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