Analys från DailyFX
USD/JPY Technical Analysis: It Could Get Scary Below These Levels
What can traders expect from USD/JPY in a year of US rate hikes? Here are our thoughts.
Talking Points:
- USD/JPY technical strategy: a close 110 on closing shifts basis to bearish
- Breakdown 110 could signal JPY strength toward 107/08 per USD
- USD/JPY testing November trend line and Ichimoku cloud base
Trading is not supposed to be easy. Of course, the rewards for those who can crack the code make an effort worthwhile, but work and adaptation is required. That truth is made apparent when looking at the ever-fluent environment surrounding USD/JPY.
USD/JPY is near proof that such a dynamic exists as the market goes from one belief to another about the economic realities of the world that shifts expectations about global capital flow. After a Q4 in 2017 that seemed markets could only go up (a la Bitcoin), USD/JPY has spent much of 2017 retracing its meteoric rise. Now, USD/JPY is testing multiple forms of key support on the chart, and if the support zones break, it may indicate more JPY strength is on its way.
The slog lower in USD/JPY on the back of disappointing US economic performance that casts doubt that the Fed will aggressively hike at the same time they look to reduce their $4.5T balance sheet holdings has left traders moving out of USD and into other markets. If this trend continues or we find next week that the Fed is going to tone down their expectations for future hikes on Friday’s NFP-miss, which aligns with our economic misses could allow USD/JPY to likely break below the key support at 110.00/50.
The chart below can help illustrate the amount of support at play near 110.00/50. To name a few, the 200-DMA currently sits at 110.18 along with a Trendline drawn off the pivotal November 9 low, which marked a shift in how traders viewed the global economy. There is also a 61.8% Fibonacci retracement level at 110.51, which tends to act as strong support in an uptrend (if it is an uptrend) and the Fibonacci level aligns with the base of the Ichimoku Cloud.
Should these levels hold, it is fair to say we could see a return of the well-missed USD strength and an eventual daily close above 112 would turn focus to 114.37+. However, a failure at these levels and a move lower would turn focus sharply on the (current) 2017 low of 108.13, which may not hold if risk-on sentiment
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Chart Created by Tyler Yell, CMT
USD/JPY IG Trader Sentiment: Yen likely to stay strong versus USD per IG Sentiment
What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!
USDJPY: As of June 05, retail trader data shows 64.6% of traders are net-long with the ratio of traders long to short at 1.83 to 1. In fact, traders have remained net-long since May 17 when USDJPY traded near 113.64; the price has moved 2.7% lower since then. The number of traders net-long is 4.5% higher than yesterday and 15.7% higher from last week, while the number of traders net-short is 22.5% higher than yesterday and 3.3% lower 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 less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias. (Emphasis Mine)
The takeaway from me for IG Client Sentiment on USD/JPY is that longs are getting more aggressive on a daily and week-over-week basis. In taking a contrarian view, this opens up the likelihood of further breakdown continuing Wednesday’s price action. A break below the levels mentioned above at 110.00/50 with this sentiment picture holding could precede an aggressive breakdown.
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Shorter-Term USD/JPY Technical Levels: Monday, June 05, 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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Contact and discuss markets with Tyler on Twitter: @ForexYell
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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