Analys från DailyFX
Price & Time: What is Really Going On In USD/JPY?
Talking Points
- GBP/USD rebounds off key support
- AUD/USD closes over important resistance
- USD/JPY recovers from critical area
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD rebounded yesterday from the 2nd square root relationship of the year-to-date high near 1.6340
- Our near-term trend bias is negative on Cable while below 1.6600
- The 1.6340 level remains an important near-term pivot with weakness below needed to trigger a more material move lower
- Minor cycle turn windows are seen around the middle of this week and early next week
- Only a daily close over 1.6600 would turn us positive on the Pound
GBP/USD Strategy: Like selling Cable into strength.
Price Time Analysis: AUD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- AUD/USD has moved only modestly higher since reversing from the 9th square root relationship of the October high near .8860 last week
- However, Monday’s close over .8960 has shifted our near-term trend bias to higher
- The .8960 remains an important near-term pivot with traction over this level exposing a key Gann convergnece near .9030/60
- A minor cycle turn window is seen over the next couple of days
- A daily close under .8860 is required to shift our trend bias back to negative in the Aussie
AUD/USD Strategy: Like the short side while under 1243.
Focus Chart of the Day: USD/JPY
The extreme one way sentiment in USD/JPY (DSI touched just 7% bulls in the Yen on December 27th) finally caught up with it last week as the exchange rate failed just shy of a key long-term retracement at 105.55. The correction that followed has been relatively mild so far and it is still up in the air as to whether this move lower is just a correction of an overbought condition or the start of a more meaningful reversal lower. A Gann line related to the 2011 low comes into play around 103.90 (Monday’s low) while the 2nd square root relationship of the year-to-date high is near 103.35. These two levels look critical over the next few days. Any material weakness below the latter will turn the technical outlook much more negative. A move back over 105.00 is needed to relieve immediate downside pressures, but only traction over 105.55 signals the start of another material leg higher.
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— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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.
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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