Analys från DailyFX
USD/JPY Trades to 2013 High and Reverses; Trade Setup in GBP/JPY
- USDJPY endures 3rd December reversal day; GBPJPY short setup
- EURNZD and GBPNZD nearing support levels
- USDMXN responds to support; trade is open
Friday’s DailyFX Plus webinar highlights developments and levels to watch in the Europe/Commodity FX pairs. (video is titled JamieTrading12132013).
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Jamie is the author of Sentiment in the Forex Market.
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Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-USDJPY traded to a new high for the year on Friday but reversed sharply. The high is not accompanied by a high in the Nikkei, which does the raise the possibility of a deeper drop. 3 daily reversal bars since 12/3 (2 are outside days) is also cause for concern.
-Still, the ‘trend extension’ setups described last week is valid as long as price is above 102.14. Weakness below there would open up the possibility of a deeper drop. 100.60-101.13 would be on the radar as possible support.
-A bullish objective of 105.12 is derived by calculating the measured move from the 103.37-101.61 dip. A close from Oct 2008 remains uncovered at 105.30.
Trading Strategy: Looking for support in the 102.65/95 region for longs against 102.10.
GBP/JPY
4Hour
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-I concern myself with trade setups and risk, not predicting what will happen next. As such, the GBPJPY may be setting up for a short.
-Price has broken through the trendline that extends off of the 11/19 and 12/5 lows. The line crosses through the 12/11 and 12/12 bars as well. From here, a ‘drift’ into the underside of the line early next week may present an opportunity to go short. 168.80 is estimated resistance.
Trading Strategy: Possible top so monitor for failure near 169 for a possible short. If this trade is taken, then plan on exiting a portion at 166.40.
4Hour
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-I’ll have more on the longer term picture in EURNZD in the upcoming “Top Ideas for 2014” but near term support in the rate is estimated near 1.6485 and trendline support.
-Trade since 11/29 may prove nothing more than consolidation before the next leg higher.
-A minor upside objective is just a test of the high in August at 1.7275 although a reaction could be seen from the 8/28 close at 1.7100.
Trading Strategy: Monitoring for support at 1.6485 and/or the upward sloping trendline.
4Hour
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-I’m of the mind that EURNZD upside potential is greater than GBPNZD upside potential given this week’s follow through in EURGBP on the prior week’s large range key reversal. Still, this rate is worth a look and could help better time a EURNZD long anyway.
-Bottom line, 1.9550 is estimated support. That level is marked by the 10/25 high and 11/26 low. 1.9550 and trendline support intersect on 12/19 (Thursday).
Trading Strategy: Same as EURNZD…monitor for support at 1.9550.
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-Tis a tale of trendlines in USDMXN. Last week, price traded into and reversed from the resistance line that originates from the 2012 high. This week, the rate reversed just before the line that originates from the Jul low.
Trading Strategy: I wrote last week that “just know that the market is coiled for a large move. Price needs to stabilize before entertaining longs.” The market has stabilized. I am long with a 12.80 stop. A drop below 12.80 would shift focus to 12.70. The target is 13.16 (trade the range as long as it’s in the range).
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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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