Analys från DailyFX
GBP/JPY Technical Analysis: Roaring Back to Life
GBP/JPY Technical Analysis: Roaring Back to Life
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Talking Points:
- GBP/JPY Technical Strategy: Intermediate-term: Bullish. Near-term: bullish.
- GBP/JPY has now rallied by more than 600 pips off the lows, but perhaps more importantly has broken above the 50% marker of the most recent retracement.
- If you’re looking for trading ideas, check out our Trading Guides. And if you’re looking for ideas that are more short-term in nature, please check out our Speculative Sentiment Index (SSI) Indicator.
In our last article, we attempted to gauge when or if the up-trend in GBP/JPY might be set to continue. After the pair had rallied by more than 2,300 pips from the lows of October, but after the FOMC rate hike in December, a change-of-pace developed in the pair as buyers ran out of steam and began take profits.
This developed into a drop of over 1,200 pips in the following month, and this led to many questions around the sustainability of the up-trend in GBP/JPY. But after catching support at the vaulted 50% level of that most recent major move (taking the post-Flash Crash low up to the December high), hope was restored that bulls may be able to re-take control of GBP/JPY price action. In our last article, we marked the level at 142.50 as significant, as this is 50% of the retracement move as well as being a psychological level. The fact that we were able to drive over this level indicates that bull may be able to continue driving prices higher, and this opens the door for bullish strategies.
Chart prepared by James Stanley
Given recent technical structure, there are three significant areas of price action swings for traders to investigate for support variable and stop placement, each outlined on the chart below. For traders looking at aggressive entries, a batch of support around the prior swing of 141.70 could be usable. For those looking to give the entry a little more ‘room to work,’ the zone around 140.75 looks more operable. And for those that want a conservative approach, the back of support around 139.00 could be attractive as this could get risk levels below the significant psychological level of 140.00.
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
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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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