Analys från DailyFX
USD/JPY One-Month Highs Meet a Data Heavy Week for USD
Can USD/JPY reverse its 2017 Trend? See our forecast to see what is driving the trends!
Talking Points:
- USD/JPY technical strategy: favoring resistance at 112 holding as US data weakens
- Golden Week holidays in Japan expected to leave order flow and liquidity light
- FOMC NFP week put focus on DXY’s ability to sustain push higher
When looking at USD/JPY, you may think that USD is beginning to turn things around. However, it’s possible by comparing it to other stronger currencies (GBP, EUR CHF) that DXY possibly sees a retracement in a downtrend in the near future. The DXY has recently re-tested its 2017 low of ~98.70. When looking at USD/JPY, there are a few helpful technical and sentiment indicators we can keep an eye on to help us see what may be next for USD/JPY.
For traders who like moving averages, the 55-DMA (111.88) has been a helpful guide as to whether traders should hold a longer-term bullish or bearish bias. Currently, the price pushing into 55-DMA from below would argue that an inability to overcome the 55-DMA would favor a resumption of the downtrend.
When looking at USD/JPY, I also notice that we are moving into the top of Andrew’s Pitchfork that has framed price well as well as into Fibonacci 61.8% retracement resistance, which is a classic retracement point in a downtrend. Much like the 55-DMA, an inability for the price to close above these multiple forms of resistance would favor a continuation lower to likely new annual lows. Lastly, you can see below the price that RSI(5) is pushing into overbought territory as the price is pushing into multiple forms of downtrend resistance.
Traders can watch RSI to see if we get a momentum burst higher (deeper into overbought) alongside a break of resistance to signify a trend change. Conversely, if RSI(5) pushes back lower, we may be seeing a nice set-up to rejoin the downtrend that would likely be validated on a break below 110.
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Chart Created by Tyler Yell, CMT
USD/JPY IG Trader Sentiment: US Dollar Trading Higher versus Yen – Reversal on Hand?
What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!
USDJPY: As of Monday, May 1,IG retail trader data shows 56.9% of traders are net-long with the ratio of traders long to short at 1.32 to 1. In fact, traders have remained net-long since Jan 09 when USDJPY traded near 117.828; theprice has moved 5.4% lower since then. The number of traders net-long is 6.0% lower than yesterday and 25.0% lower from last week, while the number of traders net-short is 6.5% lower than yesterday and 68.5% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.(Emphasis Mine)
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Shorter-Term USD/JPY Technical Levels: Monday, May 1, 2017
For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.
Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com
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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
—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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