Analys från DailyFX
USD/JPY Advance May Kick off a New Uptrend
The advance by USD/JPY has kicked off what we believe to be a new uptrend. The Elliott Wave model we are following indicates this could be powerful wave higher that retests and possibly exceeds the 2015 high of 126.
You can see from the daily chart below, USD/JPY advanced in five waves in late 2016. Since then and for all of calendar year 2017, USD/JPY has been correcting lower in a complex pattern. This w-x-y-z dip has retraced 61% of the previous up trend. Under this interpretation, the September 8 low of 107.32 is a key level.
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USD/JPY Daily Elliott Wave Count
Since September 8, prices appear to have advanced in another five wave impulse which sets into motion a larger up trend. USD/JPY has already broken above the orange trend line. A break above the red trend line will provide further confirmation an important low may be in place.
We cannot rule out a dip next week to 109.60. A correction of that nature is normal within the context of this wave pattern. A breakout that holds above 111.60 will lean the bias towards immediately higher levels to retest the red trend line near 112.80.
With the potential for a strong move higher, be careful about nitpicking over pennies. Manage the entry and trade size and let the trend do the heavy lifting for you. Learn about the biggest mistake traders make with this guide.
IG Client Sentiment shows traders have been shifting net long over the past 24 hours pushing the sentiment reading to +1.25. A shift towards net shorts recently is a bullish undertone to price. Therefore, sentiment lines up with the Elliott Wave model suggesting USDJPY may continue to trend higher in the coming weeks. View how live traders are currently positioned with our IG client sentiment tool.
—Written by Jeremy Wagner, CEWA-M
Jeremy is a Certified Elliott Wave Analyst with a Master’s designation. These articles are designed to illustrate Elliott Wave applied to the current market environment.
This article references an impulse wave. We have a one hour long webinar recording devoted to the topic of Elliott Wave impulses. Register to view it.
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Other Elliott Wave articles by Jeremy:
Crude oil price touch a 6 week high – more strength to follow?
Gold price pattern hints at $1375 retest.
GBPUSD Elliott Wave pattern clears up.
Copper prices have fallen hard…is this the beginning of a new down trend?
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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