Analys från DailyFX
Japanese Yen Technical Analysis: Watch Where USD/JPY Bounces
Talking Points:
- USD/JPY has put in yet another lower high and seems in full retreat
- A bounce at current levels might be the best thing bulls have to look forward to
- More serious worries lurk not too far below
See what the trading community makes of the Japanese Yen right now at the DailyFX sentiment page
The Japanese Yen is looking pretty bullish against its US rival.
The long USD/JPY downtrend in place since the end of 2017 was confirmed, as if it much needed confirmation, by the formation of yet another lower high on July 10. That level – 114.07 – now seems quite unattainable as the pair languishes in the high 111s, with no sign of any bullish backbone emerging at all.
The question is, where might it finally get some and bounce this time? Well, USD/JPY is currently testing a cluster of short term supports from late June. These extend from current levels down to 111.48 or so. That was June 12’s intraday low.
A bounce here would be perhaps the best any lingering bulls can now hope for. But if this region cannot hold the fall then there’s further support around July 10’s close of 110.39 and June 14’s 109.30.
Things get more serious if even those can’t stand. Then we would be looking at the possibility of a more serious challenge of the year’s low. That’s the 108.15 made on April 17. A foray down to that level will put the entire climb up from last November’s lows in an uncomfortable spotlight.
Still, the Yen may be arm wrestling the greenback down to the tabletop but it’s having a much tougher time against the Australian Dollar. AUD/JPY has been moving along the uptrend channel from June 6’s lows I noted last time in what for a daily technical chart is virtual arrow-straightness.
However a word of warning is in order. The Aussie looks rather overbought at this stage. Really overbought actually. Its Relative Strengh Index has been above what most analysts would consider the ‘warning’ level of 70 since July 10. This doesn’t have to presage any imminent collapse, but AUD/JPY looks like a currency cross in need of some pause for reflection.
A consolidative period should soon be with us and, if it isn’t, then it may be time to worry.
— 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.
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
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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