Analys från DailyFX
GBP/JPY Technical Analysis: New Trend, New Direction, Same Levels
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Talking Points:
- GBP/JPY Technical Strategy: Intermediate-term: mixed, short-term: bearish.
- GBP/JPY has put in a major reversal, and the support points we were previously looking at are now showing as resistance.
- If you’re looking for trading ideas, check out our Trading Guides. If you’re looking for shorter-term ideas, check out our IG Client Sentiment.
Just a week ago, it looked like a near-certainty that GBP/JPY would soon perch-up to a fresh post-Brexit high. With the combined forces of GBP-strength and JPY-weakness, GBP/JPY went on a robust run after the U.S. Presidential election that saw more than 2,000 pips set a high at 148.46. But as that move digested after the December rate hike from the Fed, with fears of ‘Hard Brexit’ bringing GBP-lower, GBP/JPY pulled back down to the mid-130’s again.
In mid-April, the theme of Yen weakness caught another gasp of strength that re-drove those prior bullish trends, with GBP/JPY making an aggressive move in an attempt to take out that prior-high at 148.46. The trend was strong, with very little pullback or retracement as bulls bid each minor pullback. Price action had moved within 34.7 pips of taking out that prior-high, with a top developing at 148.11.
Since then, bears have re-taken control of GBP/JPY, pushing prices-lower by as much as 450 pips over the last six trading days. This has driven price action below multiple levels of prior support, with many of those prior support levels now showing as some form of resistance.
Chart prepared by James Stanley
Given the size of this bearish retracement, those utilizing longer time-horizons will likely want to wait for matters to calm before looking to take on bullish exposure. The area around ¥141.50 could be particularly interesting for such an approach, as this is a confluent zone of potential support. At ¥141.59 we have the 50% retracement of the ‘Brexit move’ in GBP/JPY, and at ¥141.86 we have the 50% retracement of the most recent bullish ramp in the pair that started in mid-April. If support does, in fact, develop here; the door could be opened for topside swing and longer-term plays.
Chart prepared by James Stanley
Near-term, and until 141.50 comes back into play, the bearish side of the pair is likely going to look most attractive; particularly for those utilizing short-term momentum-based strategies. GBP/JPY has been showing some element of resistance off each of the support levels we looked at in our last article, and below we’ve update that with recent price action.
Chart prepared by James Stanley
— Written by James Stanley, Strategist 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
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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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