USDJPY and EURUSD Technical Analysis

Talking Points

• USD/JPY Technical Strategy: Shorts Preferred
• Harami CandlestickPattern Awaiting Confirmation
• Dojis On H4Suggests Some Reluctance Near 107

USD/JPY has bounced off the critical 106.80 floor leaving a Harami formation in its wake. Critically, the key reversal pattern awaits confirmation from a successive up-day to be validated. At this stage a sustained recovery may be challenging given the congestion between current levels and the recent peak at 110. In the alternate scenario a pullback below the 106.80 floor would open the next leg lower to 105.40

Harami Emerges Near 106.80 Barrier



A parade of short body candles and Doji formations on the four hour chart suggest hesitation from traders near the 106.80 floor. This does little to inspire confidence in the potential for a recovery over the session ahead. Sellers are likely to return near the 107.50 ceiling.

Dojis Signal Reluctance Within Intraday Range



By David de Ferranti, Currency Analyst, DailyFX


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Talking Points

• USD/JPY Technical Strategy: Shorts Preferred
• Harami CandlestickPattern Awaiting Confirmation
• Doji On H4Suggests Reluctance Near Intraday Support

USD/JPY is in the process of producing a Harami pattern near the critical 105.40 barrier. Critically, the key reversal pattern awaits confirmation from the close of the current candle and a successive up-day in order to be validated. Further, a sustained recovery may be challenging given the congestion between current levels and the recent peak at 110. In the alternate scenario a pullback below the 105.40 floor would open the next leg lower to 104.25.

Harami Takes Shape In Intraday Trade



A Doji formation on the four hour chart suggests hesitation from traders near intraday support at 105.65. This does little to inspire confidence in the potential for a recovery over the session ahead. Sellers are likely to return at former support-turned-resistance.

Doji Signals Reluctance At Nearby Support



By David de Ferranti, Currency Analyst, DailyFX


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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 107.31, 106.50, 105.18
• Resistance: 108.63, 110.08, 110.76

The US Dollar moved higher against the Japanese Yen as expected after prices put in a bullish Morning Star candlestick pattern. A daily close above the 38.2% Fibonacci retracement at 108.63 exposes the 109.70-110.08 area marked by the 50% level and the October 1 high. Alternatively, a reversal back below the 23.6% Fib at 107.31 opens the door for a test of the 14.6% expansion at 106.50.

Risk/reward considerations argue against entering long with prices in close proximity to resistance. On the other hand, the absence of a defined bearish reversal signal suggests taking up the short side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.




--- Written by Ilya Spivak, Currency Strategist for DailyFX.com



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Talking Points:

• USD/JPY Technical Strategy: Flat
• Support: 107.31, 106.50, 105.18
• Resistance: 108.63, 110.08, 110.76

The US Dollar rose as expected against the Japanese Yen after producing a bullish Morning Star candlestick pattern. Near-term resistance is in the 108.40-63 area, marked by the October 2 close and the 38.2% Fibonacci retracement. A break above that on a daily closing basis exposes the 109.70-110.08 zone (50% level, October 1 high). Alternatively, a turn back below the 23.6% Fib at 107.31 clears the way for a challenge of the 14.6% expansion at 106.50.
Prices are too close to resistance to justify entering long from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal suggests that taking up the short side is premature. With that in mind we will remain flat for now.






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Talking Points

• USD/JPY Technical Strategy: Sidelines Preferred
• Reversal Signal Arises At Critical 108.00 Handle
• H4 Chart Suggests Bears’ Confidence Is Lacking

USD/JPY continues to exhibit concerning signs of a potential pullback. The Hanging Man noted in yesterday’s report has received confirmation, which alongside the close below 108.00 may warn of further weakness. A deeper setback to former resistance-turned-support at 107.25 may see buying interest renewed.

Reversal Signal Emerges At 108.00 Handle



The four hour chart paints a less negative picture than the daily with a Piercing Line pattern evident. Yet the scope for a recovery be capped by the nearby 108.00 ceiling over the session ahead.

Piercing Line Follow-Through May Be Limited



By David de Ferranti, Currency Analyst, DailyFX


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Talking Points

• USD/JPY Technical Strategy: Longs Preferred
• Clearance Of Key Hurdles Casts Spotlight Higher
• Next Definitive Level Offers Significant Upside Scope

USD/JPY’s astounding vertical ascent has left a lack of reversal signals in its path, suggesting the potential for further gains. The next definitive peak to offer a potential resistance region rests near 114.60, the December 2007 high. However, traders should also be wary of the recent weekend gap, given the tendency of such spaces to be filled which may prove a temporary setback. A daily close below the 110.00 barrier would be required to negate a bullish bias.

Climbs Over Key Hurdles Amid A Void Of Bearish Patterns



A Doji on the four hour chart suggests the bulls may be showing signs of tiring. Yet key bearish reversal signals remain lacking, casting doubt on a corrective pullback.

Void Of Bearish Signals In Intraday Trade





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Talking Points

• USD/JPY tests key long-term retracement
• AUD/USD breaks down from multi-week consolidation
• EUR/USD tests key retracement level

Price & Time Analysis: EUR/USD

• EUR/USD traded at a new low for the year ealier today befor finding support just below the 78.6% retracement of the 2012-2014 advance in the 1.2455 area
• Our near-term trend bias is lower in the euro while under 1.2620
• A close under 1.2455 is needed to set off the next leg lower in the rate
• A minor turn window is eyed tomorrow
• A daily close over 1.2620 would turn us positive on the euro

EUR/USD Strategy: Like the short sude while below 1.2620.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2455	1.2470	1.2495	1.2550	1.2620

Price & Time Analysis: AUD/USD

• AUD/USD has turned lower today from the narrow range that has dominated trading over the past few weeks
• Our near-term trend bias is lower in the Aussie while under .8860
• The year’s closing low around .8660 is an important downside pivot with a daily close below this level needed to confirm a resumption of the broader decline
• A minor turn window is eyed tomorrow
• A close above .8860 would turn us positive again on AUD/USD

AUD/USD Strategy: Like selling into strength while below .8860.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	.8640	.8660	1970	.8770	.8860

Focus Chart of the Day: USD/JPY



The surprise announcement by the BOJ last week to expand monetary stimulus has seen USD/JPY storm higher. On Friday the pair took out the former year high at 110.10 and this morning it surpassed the key 112.40 61.8% Fibonacci retracement of the 2002-2011 decline and the 261.8% extension of the first half of the year’s range at 113.10. The market has become seemingly unstoppable There is one major potential reaction zone ahead and that is the 78.6% retracement of the 2007-2011 decline at 113.75. Over the past year the exchange rate has reacted well to these long-term retracements so a reaction from the pair at this key resistance cannot be completely discounted – especially with sentiment back at multi-year extremes (DSI in JPY fell to just 3% bulls on Friday). From a longer-term Fibonacci perspective a multi-day close over this level would be very positive indeed and set the stage for an eventual push towards the next key cluster of resistance around 120.00.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com


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The Euro sank to the lowest level in over two years against the US Dollar, with sellers claiming a foothold below the 1.25 figure. A daily close below the 38.2% Fibonacci expansion at 1.2316 exposes the 50% level at 1.2140. Alternatively, a turn above the 1.2500-34 area (October 3 low, 23.6% Fib) clears the way for a challenge of trend line resistance at 1.2723.
We entered short EURUSD at 1.2710 in line with our long-term fundamental outlook subsequently booked profit on half of the position. The rest of the trade remains open to capture any further downside momentum with a stop-loss at breakeven (1.2710).




--- Written by Ilya Spivak, Currency Strategist for DailyFX.com



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Talking Points

• Strategy: Long, Stop: 114.60 (Close), Target: 115.90
• Absence Of Bearish Signals Opens Further Gains
• Watching H4 Chart For Signs Of Bulls’ Exhaustion

USD/JPY has continued its journey higher with a void of reversal signals opening the prospect of a run on 115.90 (the Nov ’07 high). A pullback below former resistance-turned-support at 114.60 would be required to warn of a correction for the pair.

Absence Of Bearish Signals Casts Risks Higher



The four hour chart should be closely monitored for early warning signs that the bulls may be losing steam. A Doji formation near 115.46 suggests indecision, but alone does not offer a warning of a reversal.

Watching For Early Hints At A Reversal



By David de Ferranti, Currency Analyst, DailyFX


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Talking Points

• Strategy: Long > 115.90, Target: 117.90, Stop: 115.90 (Close)
• Focus Remains Higher With Bearish Signals Lacking
• Dojis Signal Enduring Tug-Of-War In Intraday Trade

USD/JPY has powered higher in recent trade, leaving a Hanging Manformation to fall flat. With bearish signals lacking the pair may be primed for further gains. Clearance of the nearby 115.90 hurdle could pave the way for an ascent on the October ’07 high near 117.90. A daily close below 114.50 would be required to warn of a top for the pair.

Awaits Break Above Recent Highs With Bearish Signals Lacking



Tensions are running high in intraday trade, as evidenced by a string of Dojiformations on the four hour chart. Yet a lack of more definitive reversal signals suggests the bulls may yet regain their grip on prices to lead the charge higher.

Dojis Signal Enduring Tug-Of-War In Intraday Trade



By David de Ferranti, Currency Analyst, DailyFX


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