Analys från DailyFX

Good Chance to Buy GBP/JPY on a Pullback

Published

11 år ago

17 december, 2013

DailyFX

Talking Points:

Pronounced Risk Factors Looming Right Now
How to Qualify Good Set-ups
Potential Buy Entry in GBP/JPY

As we enter the holiday season, prices are getting noticeably choppier. Many of the major currency pairs have been consolidating on the hourly time frame for the past two days, and it has been generally unsafe to enter.

By and large, the crosses have been trending without a sufficient pullback on which to enter, and only the British pound (GBP) crosses have anything especially interesting setting up right now. That said, due to the choppiness of most major pairs, it would be unwise to enter the fray at current prices, as in this environment especially, trading accounts can be quickly chopped to bits.

Thus, the solution would be only to take set-ups for which the entry point is far enough away that it would not get caught up in the wiggles, but that is still close enough that it could realistically trigger. We find such an opportunity setting up now in GBPJPY.

The daily chart below demonstrates a broken trend line, and following classical theory, price should wander down to test the second and third trend lines. However, a closer look at price action suggests that there is a horizontal area of support which may, in fact, come into play.

Guest Commentary: “Hidden” Support Level in GBP/JPY

This is particularly true because the broken trend line has not yet been meaningfully re-tested. Thus, a logical conclusion would be that there might be a reasonable bounce off this zone to bring price back to touch the underside of the steepest trend line.

This scenario is demonstrated on the four-hour chart of GBPJPY below:

Guest Commentary: Potential Buy Set-up in GBP/JPY

As always, price will do exactly what it wants, including break the previous zone of support. Nonetheless, this is a very reasonable area from which to go long. There should be at least a sufficient reaction in price after coming down to test the support zone.

However, this being the infamous GBPJPY, and being the holiday season to boot, a certain amount of choppiness can be expected, and for this reason, a slight buffer has been given when estimating the bottom of the support zone.

The top has been obtained from previous support levels in price. In the final analysis, the support zone emerges as 165.63-166.82.

The ideal time frame for trading this set-up would be on the hourly chart (not shown). Price is currently hesitating to go further down, and it may even fail to reach this zone. However, in a period of increased caution and choppiness, missing a trade is preferable to being in one and regretting it.

Viable trade triggers would be the usual pin bars, bullish engulfing patterns, and/or bullish reversal divergence on the hourly chart.

There is an important note here regarding the two or three tries that are typically recommended when looking to enter new trades. As markets become choppy, one try will rarely do it. Some traders may even choose to skip the first entry while expecting it to fail, and will instead take the second entry. While this is safer (in a sense), it also means that if the move runs straight away, they will be left behind with no position.

Individual traders will have to weigh this decision and decide for themselves what is best. What is obvious is that a much more defensive style of trading is now in order, so be sure to enter multiple positions in this trade so that scaling out will be possible should the trade trigger but then show signs of not working.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

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

You can receive Paul’s analysis directly via email bysigning up here.

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

To be added to Christopher’s e-mail distribution list, please fill out this form