Analys från DailyFX
GBP/JPY Technical Analysis: Next Directional Move Proving Elusive
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Talking Points:
- GBP/JPY Technical Strategy: Intermediate-term: Congested, short-term: Expansionary pattern (megaphone).
- GBP/JPY finally broke out of the month-old wedge, but sellers were unable to create significant drive sub-139.00.
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In our last article, we looked at an expansion in price action in GBP/JPY with the aim of finding the next directional move after GBP/JPY had spent much of the prior three months building into a symmetrical wedge pattern. And while we did see a bottom-side break of the wedge before that megaphone pattern had showed-up, the inability of bears to push prices significantly below prior support made short-exposure in the pair a bit less attractive. Since then, we’ve seen price action volley back towards the projected trend-lines that made-up that symmetrical wedge pattern:
Chart prepared by James Stanley
In our last article, we looked at how to work with a megaphone pattern, biasing the top-side of the pair and looking to the level of resistance at 140.62 to signal top-side continuation potential. This level has come in as short-term resistance, so it would still be as usable today in the effort of catching bullish continuation in GBP/JPY.
Chart prepared by James Stanley
Given the various levels of resistance sitting just above current price action in GBP/JPY, traders can use these levels in the effort of timing a top-side approach. Secondary levels of resistance around 141.03 and 141.60 could become usable. Should bulls pose a break of the 140.62 zone, traders can wait for resistance to show up at a secondary level; at which point they can attempt to catch a ‘higher-low’ around 140.62 in the effort of a top-side, continuation-based approach.
— 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.
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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