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Short-term Selling Opportunity in USD/JPY Midweek

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The USDJPY has been on fire since last Wednesday, racking up over 300-pips in less than a week all thanks to the Fed’s hawkish policy shift on June 19. Boosted by higher US Treasury yields, the US Dollar has outperformed the rest of the majors covered by DailyFX Research quite easily, with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) only down -0.22% in June now, after being down by as much as -2.73% on June 13.

The integral part of the stronger USDOLLAR has been the explosive USDJPY, which isn’t a surprise given the sharp uptick in US Treasury yields; Quantitative Strategist David Rodriguez examined this connection earlier on Tuesday. However, in recent days, as the 10-year US Treasury note yield, for example, set new 2013 highs and its highest level in 22-months; and yet the USDJPY still remained below its post-FOMC high of ¥98.70.

Now, as Chief Currency Strategist John Kicklighter noted earlier tonight in the DailyFX Real Time News feed, the USDJPY may be carving out a Head Shoulders top on the H2 timeframe, supported by the declining nature of the H2 RSI at each peak in the pattern (bearish divergence at a top is common). The pattern implies a selloff back to 95.00/05 in the USDJPY.

USDJPY 2-hour Chart: June 25, 2013

Short-term_Selling_Opportunity_in_USDJPY_Midweek_body_Picture_12.png, Short-term Selling Opportunity in USD/JPY Midweek

Charts Created using Marketscope – Prepared by Christopher Vecchio

STRATEGY – SHORT USDJPY

Entry: At market (98.11 at the time of writing (assumed for strategy))) or “Short Zone” at 98.25/45

Stop: 98.75 (-64-pips)

Target 1 (Reward/Risk Ratio): 95.01 (+310-pips, 4.84)

Timeframe: 1-day to 1-week

USD TOP EVENT RISK – June 23 to June 28

Short-term_Selling_Opportunity_in_USDJPY_Midweek_body_Picture_1.png, Short-term Selling Opportunity in USD/JPY Midweek

View the full USD economic calendar for this week.

JPY TOP EVENT RISK – June 23 to June 28

Short-term_Selling_Opportunity_in_USDJPY_Midweek_body_x0000_i1029.png, Short-term Selling Opportunity in USD/JPY Midweek

View the full JPY economic calendar for this week.

— Written by Christopher Vecchio, Currency Analyst

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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EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

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

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

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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