Analys från DailyFX
GBP/JPY Technical Analysis: Bullish Continuation Seeking Higher-Low
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Talking Points:
- GBP/JPY Technical Strategy: Bullish; near-term price action congesting after another higher-high.
- After an extremely-extended move post-election, traders may want to wait for a deeper retracement before plotting continuation-strategies.
- If you’re looking for trading ideas, check out our Trading Guides.
In our last article, we looked at the continued up-trend in GBP/JPY as the pair had moved-up by 2,000 pips in the wake of the U.S. Presidential Election. At the time, GBP/JPY was ‘digging-in’ higher-low support around an interesting level at 143.23, which was the post-Brexit swing-high in the pair. But after that support cauterized, price action burst-higher, again, to set a new short-term swing-high at 148.46.
But after that resistance showed-up around 148.46, GBP/JPY has been unable to string-together any element of bullish-continuation. While support has shown-up briefly, sellers have come back into the market relatively quickly, and we’re beginning to see lower-lows and lower-highs on shorter-term charts; indicating that we may have some time until this retracement-lower finishes. So while the ‘bigger picture’ bullish trend is still very much alive with price action remaining near highs, traders may want to wait a bit before looking to pose that next higher-low in the pair.
As we move into year-end on a pair that’s seen considerable volatility throughout 2016: Opening the year above 177.00, then dropping as low as 123.00 after the Brexit referendum and then back up towards 148.50 after the Presidential election, traders will likely want to move-forward with a great deal of caution here.
What this means for trend-continuation is a bit more patience in trying to catch that next ‘higher-low’. Below we look at two areas that traders can watch for this to develop.
Chart 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.
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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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