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USD/JPY Price Analysis: 5-Week High On Persistent Yen Weakness

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What can traders expect from USD/JPY in a year of US rate hikes?Click here for our thoughts.

Highlights:

Don’t look now (ok, go ahead), but JPY weakness is becoming a persistent theme again that traders are watching. Amidst the flurry of central bank activities in mid-June, the Bank of Japan (BoJ) failed to discuss the process of tapering that they will embark on when the Abe government if they survive the coming election, decides to end their Qualitative and Quantitative Easing (QQE) program.

While a lot of focus will be on USD/JPY, traders would be well served to look at relatively stronger currencies like the Canadian Dollar, New Zealand Dollar, or Euro against the Japanese Yen. While USD/JPY has been choppy, a persistent theme on the price chart has been higher lows from the April and 2017 low of 108.13. Traders are now keeping an eye on UST yields that tend to see gains (Treasuries are getting sold) as USD/JPY rises.

The price on Tuesday broke above the May 24 high of 112.13, and now focus may turn to the May 17 high, May 17 provided one of the most aggressive sell-offs in a year, at 113.125. In no uncertain terms, the USD does not look to be the best play against the JPY given that there are stronger currencies that are likely a better play vs. the JPY, but if Yen weakness intensifies, we could see further upside still. The sentiment picture explained below helps to show another argument for focusing higher on JPY crosses.

The trendline on the chart below is drawn from closing highs going back to December 15. The price that meets the point along the trendline is near 113.15. A breakout validated by a daily close above the trendline would argue a persistent theme of JPY weakness is upon us with plenty of opportunities that we’ll work to keep you aware.

Join Tyler in his Daily Closing Bell webinars at 3 pm ET to discuss market developments.

USD/JPY Price Analysis: 5-Week High On Persistent Yen Weakness

Chart Created by Tyler Yell, CMT

USD/JPY IG Trader Sentiment:US Dollar may Rally Further versus Japanese Yen

USD/JPY Price Analysis: 5-Week High On Persistent Yen Weakness

What do retail traders’ buy/sell decisions hint about the JPY trend? Click here to find out.

USDJPY: Retail trader data shows 57.3% of traders are net-long with the ratio of traders long to short at 1.34 to 1. In fact, traders have remained net-long since May 17 when USDJPY traded near 113.757; price has moved 1.3% lower since then. The number of traders net-long is 11.6% lower than yesterday and 15.2% lower from last week, while the number of traders net-short is 3.6% higher than yesterday and 8.4% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long. (Emphasis Mine)

Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com

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Contact and discuss markets with Tyler on Twitter: @ForexYell

Analys från DailyFX

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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