Analys från DailyFX
Technical Weekly: USD/JPY and 110.00; Bears’ Kryptonite
- EUR/USD and USD/CHF follow through on outside weekly reversals
- NZD/USD trendline is just below .6800
- USD/JPY low is at the 200 week average
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EUR/USD
Weekly (LOG)
Chart Prepared by Jamie Saettele, CMT
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I’ve noted long term EUR/USD bottoming conditions recently such as the key reversal in January, divergence with RSI (monthly and weekly) and the channeling decline. However, the follow through on the weekly outside reversal doesn’t exactly inspire confidence in near term (at least) upside. What’s more, the rally from January is left as a 3 wave advance at this point and ‘counts’ as a 4th wave within a 5 wave decline from the 2016 high. The implication is that a 5th wave lower is underway to at least 1.0200 (measured target based on wave 1 = wave 5).
GBP/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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GBP/USD has been trading sideways since the October crash in what may be a triangle. The end of the quarterly declines mentioned last week shouldn’t be forgotten however. “For the 3rd time in history, a string of 6 consecutive down quarters has ended. The prior to instances were major lows but also resolved with clean quarterly reversal candles. Q1 just carved an inside bar.” As such, I’m still open to both sides within the range and must acknowledge the possibility of an A-triangle B scenario from the October low.
AUD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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Every AUD/USD poke into .7700-.7800 over the last year has failed. The main consideration for resistance up there are from parallels. As long as price is below the parallel, longs are fighting an uphill battle. After the February top, I noted that “the dip could extend to the October and December 2015 highs at .7385.” That level is back in play again.
NZD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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Don’t forget about the 2015-2016 trendline just below .6800 in Kiwi. Bigger picture, I’m still lost. Is the rally from August 2015 countertrend or a new trend? The 2016 and YTD highs are at major resistance from the 2011 low and a double top target is still unmet at .5899. A break under the 2015-2016 trendline would suggest a good deal more downside. Until then, keep an open mind.
USD/JPY
Weekly
Chart Prepared by Jamie Saettele, CMT
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Last week’s update noted that “a major USD/JPY level could be met in April. The 52 week average (support and resistance for years) is near 108.30 and the 50% retracement of the decline is at 108.81 (the 1991 high was a 50% retracement of the 1990 decline by the way). The decline from the January high would consist of 2 equal legs at 108.49. This zone (108.30/81) intersects with the developing channel from the January high in mid-April.” These levels should still be monitored but the last 2 weeks have found demand above 110.00, which is also the 200 week average. This average has historically served as a decent long term pivot. Weekly RSI stalling near 50 is also interesting. The dips throughout 2013 and 2014 resulted in RSI bottoming near 50.
USD/CAD
Weekly
Chart Prepared by Jamie Saettele, CMT
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There is no change to the USD/CAD weekly comments, which continues to tread water under range highs. “The USD/CAD rally from May 2016 is corrective so the bias is for impulsive weakness but the proximity of a long term parallel to the December high increases risk of a bull trap on a push through the horizontal level (failed breakout). However, the March high is a few ticks below the 52 week closing high so it’s possible that USD/CAD is ready for its next leg lower. Weekly RSI has been failing near 40 since late 2016 which is bearish behavior.”
USD/CHF
Weekly
Chart Prepared by Jamie Saettele, CMT
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My USD/CHF focus has been on the trendline that originates at the September 2011 low. The line has been support on every touch since 2015 (including the US election). Of course, the latest dip didn’t even reach the line! Like EUR/USD (inverse) price has followed through on the prior week’s outside reversal. The 55 week average was also support at the low. The bullish outside week and follow through is a great way to begin a directional leg. The line that connects the 2012 and 2015 (twice) highs is resistance just below 1.0500.
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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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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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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