Analys från DailyFX
USD/JPY Technical Analysis: Retail Buyers Load In Before Trump Speech
Talking Points:
- USD/JPY Technical Strategy: JPY gains continue on break below 100-DMA
- Previous Post: USD/JPY Technical Analysis: Relative Strength Keeps USD/JPY Lower
- SSI is currently +2.7344 onUSD/JPY as 73% of retail traders are currently long: To stay up with the Speculative Sentiment Index, please click here.
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JPY strength continues into the close of February and in anticipation of President Trump’s speech that will be analyzed for details on the timing of stimulus that could revive the reflation trade. There is a strong positive correlation to yields of US Treasuries and USD/JPY and a clear message from President Trump that inflationary inducing policies are on their way would likely help boost USD/JPY. Lack of details could keep the market on its current course of giving back-post election gains, most notably in JPY crosses. An additional fundamental note worth considering is that March is the last month of the Japanese Fiscal Year, which may lead to further JPY demand in the coming weeks from Japanese accounts that could push USD/JPY lower.
As of Tuesday, the Japanese Yen is the strongest currency in G8 FX on a relative basis, when analyzed on an H4-chart against a 200-DMA. From a momentum perspective, it’s difficult to tell when the momentum will stall. Traders who track momentum can look to RSI(5) on the Daily Chart to see if a higher low in RSI(5) aligns with the chart support of the Ichimoku Cloud and Andrew’s Pitchfork drawn from the closing low of last Summer. The 100-DMA also aligns with the Ichimoku Cloud base at 111.74.
Lastly, traders who utilize sentiment via SSI in their analysis should note there has been a large surge in long orders in USD/JPY. SSI is currently +2.7344 on USD/JPY as 73% of retail traders are currently long. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long provides asignal that the USDJPY may continue lower. The trading crowd has grown more net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish bias.
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The chart shows the momentum in 2017 has been Bearish. Momentum is famous for pushing past the point of expectation so Trader’s may want to think twice or reduce counter-trend trade size on USD/JPY.
Trader’s looking for a breakout will likely focus on the February high of 114.95 to validate that the Bull trend from Q42016 is resuming. Selling the strongest currency, which the JPY currently is, is ill-advised due to the momentum component and the lack of subsequent sustainable USD strength.
The US Dollar has stabilizedrecently, thanks in part to the re-emergence of geopolitical risk in Europe with upcoming elections that have subsequently kept EUR near the bottom of the relative strength rankings in G8FX.
Tonight’s speech from President Trump could breathe new life into the Bulls that seem to have taken 2017 off so far. If we get a breakout higher in USD pairs in favor of USD, we should keep an eye on an aggressive shift in positions or add to early reversal bets. Such a move could make March an exciting month for trading. Without such a reversal, we’ll anticipate further low volatility and USD-weakness.
D1 USD/JPY Chart: USD/JPY Trading Into Bullish Channel Ichimoku Cloud Support
Chart Created by Tyler Yell, CMT
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Shorter-Term USD/JPY Technical Levels: February 28, 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.
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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