Analys från DailyFX

GBP/JPY Technical Analysis: Into the Jaws of Support

Published

8 år ago

27 november, 2015

DailyFX

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Talking Points:

GBP/JPY Technical Strategy: Flat, long-reversal setup in previous article stopped out.
GBP/JPY put in a major move lower on Monday and Tuesday of this week, moving back to a familiar support level at 184.29.
With an unclear/undefined near-term trend, traders looking to trade GBP/JPY can utilize mean-reversion strategies until a more clear direction is defined.

In our last article, we looked at the prospect of a reversal play in GBP/JPY as price action had just run down to support of a near-term trend channel, and traders and the opportunity to look for attractive risk-reward ratios with top-side resumption. The basis for the play, as outlined in that article, was the prospect of getting a ~70 pip stop in a pair that can really show the fireworks should the trend resume higher. This could’ve opened the door for profit targets as far as ~285 pips away, offering a top-end 1-to-4 risk-reward ratio.

That did not come to pass as the selling pressure in GBP/JPY continued for the first two days of this week to bring price action back towards a very familiar support zone from 183.96-184.29. The price of 183.96 is a critical level on GBP/JPY, as this is the 50% Fibonacci retracement of the ‘big picture’ move, incorporating the 2007 high to the 2011 low. The 184.29 level has become interesting of late, as that was November low for much of the month, and has seen two re-tests over the past four trading days.

The level of relevance moving forward appears to be that long-term Fibonacci level at 183.96. Should price action remain supported above 184.29, traders can look for top-side plays with stops lodged below this key support level. To offset the approximate ~100 pips of risk that would be required to get stops below that 183.96 level, traders would likely want to target 186 or more to ensure a minimum 1-to-1. Reversal setups, no matter how attractive support may appear, are rarely beneficial over the long-term with less than a 1-to-1, and if you’d like to find out more on that topic, I highly recommend checking out our research series on Traits of Successful Traders.

On that front, for traders that do want to push the top-side reversal, profit targets could be sought out at 186.38, which is the 61.8% retracement of the most recent major move, followed by 186.87 which is the 76.4% retracement of that same move. This secondary profit target would allow for a 1-to-2 risk-reward ratio, which can be considerably more attractive for such reversal setups.

If 186.87 comes in, deeper profit targets could be sought out at 187.50 (major psychological level), 187.84 (38.2% Fibonacci retracement of the secondary move), and then 188.50, which is the 27.2% extension of the most recent major move, and the previous swing-high.

Created with Marketscope/Trading Station II; prepared by James Stanley

— Written by James Stanley, Analyst for DailyFX.com

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Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 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

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You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 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

7 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

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