Analys från DailyFX
Technical Analysis: Japanese Yen Still Waiting For A Break
Talking Points:
- USD/JPY is in a strange place. It is below an impressive uptrend but could yet hold on
- Much may depend on this week’s close
- Meanwhile, AUD/JPY looks more precarious. Bulls must defend mid-April’s low
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The Japanese Yen is in an odd spot against the US Dollar technically speaking.
A quite-impressive uptrend from April 19 was broken on May 12 -an uptrend which included a run of eight straight higher closes. And if bulls have the resolve to get that rise back on track they’ve kept it well hidden so far.
However, the bears aren’t showing much belief either. That uptrend break was nailed down by just two strong, consecutive daily falls, on May 16 and 17. Since then the pair has done nothing much of anything, having spent the last week in a very tight range indeed.
So, what does come next? Well, current price action takes the Dollar close to the top of an emerging downtrend which started on May 11. Admittedly this isn’t very old, but the bulls are going to have to at least reach it if they’re going to consolidate around current levels and then maybe push higher.
At present, it comes in at 112.31 and it looks as though a Friday (and of course weekly) close above that will be a tall order for the US Dollar.
If it indeed proves to be too much then bear in mind that there’s little solid support between current levels and mid-April’s lows around 108.42.
AUD/JPY looks precarious too.It has moved even further away from the trendline resistance level which has capped it all year. In truth, it’s now so far away that a serious assault looks most unlikely without a lengthy period of consolidation and then a push higher.
While the cross may yet consolidate around current levels, support at the April 19 closing low – which stemmed the last serious foray lower – is coming into view. The bulls will need to defend this point vigorously.
— 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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