Analys från DailyFX
Japanese Yen Technical Analysis: USD/JPY Stalls Before 1st Hurdle
Talking Points:
- USD/JPY has had a great run but appears to be losing steam
- This needn’t be awful news, but the short-term range looks set to endure
- GBP/JPY has a similar story to tell
Discover how the trading community views the Japanese Yen right now at the DailyFX Sentiment Page
The Japanese Yen has been under pressure against the US Dollar since June 15.
On that day, an impressive charge by USD/JPY bulls took the pair well above a key downtrend line which had capped it ever since the year’s highs were struck on May 10. That line has been rendered of merely historical interest by the run higher since. However, there are no signs that this renewed vigor is waning and, indeed, that it may be doing so before it has managed to top even the first key obstacle in its way.
The closing levels of May 15 (113.64) and 16 (112.80) are possibly significant as both days hit the market with sharp falls. While USD/JPY did manage to poke its nose above that second resistance level this week, it only did so once and on an intra-day basis, on Thursday.
Those resistance levels will have to be overcome if the pair is to move up and away from the broad range trade which has been in place since May 17, between 112.78 and 109.25. USD/JPY’s inability to crack them doesn’t necessarily mean a catastrophic fall, but it does suggest that that range trade will endure.
The British Pound has put in a remarkable run of gains against the Japanese currency, with fundamentals largely in the driving seat. Bank of England Governor Mark Carney has at least raised the prospect of higher interest rates while a reduced Parliamentary majority for the ruling Conservative Party may mean a “softer” Brexit.
Technically, GBP/JPY remains tantalizingly close to its high for the year. That was the 147.08 area reached on May 10. However, the cross seems to be losing a measure of impetus and has clearly stalled at the 146.57 resistance area. This was May 15’s closing high. That level is going to have to break on at least a daily basis if another assault on the summit is to take place.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
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.
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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
To be added to Christopher’s e-mail distribution list, please fill out this form
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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