Analys från DailyFX
Japanese Yen and Nikkei Trade Setups-1st and 4th Quarter Symmetry?
2013 began with strong trending moves in the Japanese currency and stock market. The USDJPY, Nikkei 225, and ZARJPY have broken through May-July trendlines. The seeds may be sown for these markets to end the year as they began…in strong trends.
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Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-USDJPY low for the month at 98.27 is still the first trading day of the month. In bull trends, early month lows and late month highs are common.
-Last Friday’s (9/6) USDJPY slide found low at the topside of former trendline resistance. Daily structure is considered healthy as long as the daily close is above 98.80 (prior closing peak).
-A small range key reversal on Wednesday is still in place but the dip found support near last Friday’s close and from former resistance at 99.14 (8/23 high).
-Daily RSI has exceeded 60 twice in the last 2 weeks but failed to stay above the barrier. This is a concern for bulls.
Strategy – Looking for a low at more or less current level. Watch 98.80-99.15 (20 day average and line that extends off of 9/6 and 9/12 lows).
Nikkei 225
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-The Nikkei 225 broke through the line that extends off of the May and July highs on Monday (9/9). The break increases confidence in the USDJPY break one week earlier (on 9/2).
-The decline from the July high to the August low is in 3 waves (corrective), implying that 14963 will be broken before 13160 is broken. Wave C took the form of a diagonal and has been completely retraced.
-The rally from 13160 unfolded in 5 waves (impulsive). Impulsive channeling suggests that the presented account is the correct count (impulsive channel – connect waves 2 and 4, then extend a parallel line to the top of wave 3. That line often estimates the end of wave 5).
-The pullback from 14578 stopped 10 points shy of the former 4th wave area (14158-13675) on Thursday. 5 wave rallies are followed by 3 wave declines that often end near the previous 4th wave extreme (circled), which is also the 61.8% retracement in this instance. That level is support if reached but I’m not dismissing gains from the current level as real markets rarely follow textbook scripts and the near term momentum profile has changed. Since the 13160 low, price tops have occurred when RSI (4 hour) is above 70 and price lows when RSI is near 50. This is an example of a bullish momentum profile (see the left side of the chart as well).
Nikkei 225
4Hour
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-ZARJPY has made important lows at this time of year in recent years. The 2011 low occurred in September. The 2012 low occurred in October. In other words, frequency of lows is roughly 1 year.
-Price has broken the line that extends off of the May and July highs as well as the series of highs from 8/9-8/15.
-Weekly RSI(13) has crossed above 40. A bullish momentum profile is one in which RSI exceeds 70 at price highs and holds above 30 at price lows (the higher the RSI figure at the low, the stronger the market).
-‘Launch points’ for extended rallies have occurred as double bottoms of sorts in recent years. In 2011, lows were made in September and November. In 2012, lows were made in June and October. This year, lows have been made in June and August (remains to be seen if the August low holds…but off to a good start).
-Getting ahead of ourselves here…but price could be forming a massive inverse head and shoulders pattern (upward sloping as well).
Strategy – Watching for support from the top side of the broken trendline near 9.84.
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
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.
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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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