Analys från DailyFX
USD/JPY Technical Analysis: Relative Strength Keeps USD/JPY Lower
Talking Points:
- USD/JPY Technical Strategy: watching price reaction to Feb. low (111.594) to build bias
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The Japanese Yen has quietly snuck into the top spot of G8 FX on a relative basis. One of my core trading rules is never to sell the strongest currencyand never to buy the weakest currency until a significant technical shift has developed.
On Friday morning, USD/JPY fell near 112 but did not hit the breakdown target illustrated in Tuesday’s webinar of 111.78. The price of USD/JPY now looks poised to test the February low at 111.594. In addition to the Febarury low, the 100-DMA sits near 111.73, and if neither of these levels hold as support, we could see the persistence strength persist. The SSI reading of +2 seem to favor the move lower into and possibly through support.
The move lower seems to align with the drop in global equity indices and a move back into the recently-hated treasuries, which have not seen the yield fall toward 2.32. The yield on the US 10yr has fallen ~6.5% in February, which has correlated well to both a soft-USD and persistent JPY.
You can see on the chart below the USD/JPY has trended quietly lower and is now approaching two key zones of advanced Technical Analysis support. First, the Ichimoku Cloud Base and the lower median line of Andrew’s Pitchfork drawn from the Closing Summer Low, which has done a fine job of framing price action since October.
The relative ranking is based on a 240-minute chart with a 200-period moving average applied, and the ranking is based on an indexing of whether a currency is often above or below the 200-ma against a multitude of currency pairs. The strong JPY reading and subsequent weak EUR ranking means they are on the winning and losing side, respectively of the 200-MA against other currency pairs.
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H4 USD/JPY Chart: USD/JPY Trading Above February Low (111.594) With Bearish Momentum
Chart Created by Tyler Yell, CMT
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Shorter-Term USD/JPY Technical Levels: February 24, 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.
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.
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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
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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