Analys från DailyFX
Japanese Yen Technical Analysis: USD/JPY Tests Key Resistance
Talking Points
- USD/JPY is currently undergoing what could be a crucial nea- term test
- If the bears win then this year’s long downtrend will endure
- Things look better for GBP/USD, but the year’s peak looms ahead
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In my last technical look at USD/JPY, I suggested that May 15’s closing high of 113.76 might provide bulls with their first real test of the current, impressive uptrend.
The US Dollar posted two days of sharp falls after making it, suggesting that it might be quite a formidable barrier. Indeed, it proved to be so just this week with Wednesday’s intraday high coming in at exactly that point. However, at the time of writing (0230 GMT Friday), USD/JPY has just managed to top 113.76 for the first time since it made the high back in mid-May, if only by a whisker so far.
If bulls can force the pace and bring about a daily (and, at this point, weekly) close above it, then the last significant top, May 10’s 114.30, will beckon. Above that looms March 13’s 115.41 and the year’s highs beyond.
However, if we take a few steps back and look at the chart we can see that that May 10 peak is crucial. If the current uptrend fails below it then we will have seen a second significant lower high and long, gradual downtrend in place for all of 2017 will continue its dominance.
Meanwhile the British Pound has also managed a good showing against the Japanese currency and may also be facing a key test. GBP/JPY has closed higher for 19 of the past 22 trading days. The fundamental news behind this gain is that the Bank of England has struck a more hawkish policy tone while the Bank of Japan remains committed to extraordinarily loose monetary settings.
That variance has taken GBP/JPY to within a very short distance of 2017’s high, the 148.10 struck on May 10. However, the climb to that high involved lots of successive green candlesticks followed by a more gradual slide. History might well repeat itself.
Sterling’s Relative Strength Indicator nudging up toward what most analysts would consider overbought territory. While the cross may yet reach and even surpass that May peak, it’s doubtful that the bulls have too much more gas in the tank.
— 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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