Analyst Picks

Paul Robinson , Market Analyst

Paul Robinson
My Picks:  Pending Short EURUSD
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

Check out the fundamental view on EURUSD in our Q4 Forecast.

We aren’t quite there yet, but a topping pattern – ‘Head-and-shoulders’ – is coming more and more into focus with each passing day. The beginning of the pending pattern starts back in early August with the development of a ‘left shoulder’, the ‘head’ came early September upon a failure at the 2012 low, and now we are left waiting for a ‘right shoulder’ to fully form. It may have already done-so with the turn down from 11880. To make the pattern official, though, we not only need the ‘right shoulder’ to solidify but also see a daily closing bar below the ‘neckline’.

The 'measured move' target on a clean break of the 'neckline' is derived by taking the height of the pattern and subtracting it from the ‘neckline’. This method points to a target in the mid-11200s. This would take EURUSD a good distance back into the range from 2015-2017, so it’s possible if it's to eventually trade much higher, broadly speaking, that a move lower may be truncated and not reach the end-target. But this doesn’t mean there still isn’t a good risk/reward opportunity here brewing. Swing-traders can operate off the daily chart, and for those trading shorter-term time-frames (i.e 4-hr or less), a confirmed break can be used to help shape trades by following the path of least resisistance.

See the new psychology guide - Building Confidence in Trading

EURUSD: Daily

EURUSD Daily Chart

An update will be provided should we get the confirmation we’re looking for. To follow along as price action progresses, you can join me on Wednesdays and Fridays for the “London FX & CFD Trading” webinars. For details, check out the Webinar Calendar.

Trade Parameters:

Entry: Daily close below the neckline.

Stop: Above the neckline.

Target: Measured move target = ~11250

---Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

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Michael Boutros , Currency Strategist

Michael Boutros
My Picks:  Near-term Setups in Bitcoin, Ethereum and USD/JPY
Expertise:  Technical Analaysis
Average Time Frame of Trades:  1-3 Days

Here's an update on the setups we’ve been tracking this week. Find a detailed, in-depth review of these setups and more in this week’s Strategy Webinar.

BTC/USD Daily Chart

Bitcoin Price Chart - Daily Timeframe

Bitcoin ripped through resistance today with the advance taking out, “subsequent resistance targets at 5200 & 5375.” The rally marks the largest single-day advance since in nearly a month with prices registered a high at 5388 today before turning lower. Likely to see some pullback here but the focus remains higher while above 4979 with bullish invalidation now raised to 4600. A breach higher targets the upper median-line parallel, currently just above ~5500.

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ETHUSD: Ethereum prices have continued to hold within the initial monthly opening-range which has taken shape just below a key resistance range at 312/20. The broader focus remains weighted to the topside, but we’ll have to respect the possibility of a near-term correction if the range breaks. I highlighted this setup in today’s scalp report.

Join Michael this Friday for his bi-weekly Webinar on the Foundations of Technical Analysis- Register for Free Here!

USD/JPY 240min Chart

USD/JPY Price Chart - Daily Timeframe

I’m looking for a reaction in USD/JPY on a move into the 112-handle with the near-term risk still weighted to the downside while below the weekly open at 112.56. Note that the 50-line converges on the 23.6% retracement / weekly low heading into the close of the week. A break below this region targets 111.10 & 110.67/82 – both levels of interest for possible exhaustion / long-entries. Click here to review this week’s USD/JPY scalp report.

See how shifts in USD/JPY retail positioning are impacting trend- Click here to learn more about sentiment!

---Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or contact him at mboutros@dailyfx.com

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David Song , Currency Analyst

David Song
My Picks:  Bullish EUR/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

Sign Up & Join DailyFX Currency Analyst David Song to Discuss Key FX Themes & Potential Trade Setups.

EUR/USD may continue to retrace the decline from the 2017-high (1.2092) as it bounces back ahead of the August-low (1.1662) and carves a fresh series of higher highs & lows.

Despite the uncertainty posed by Catalan’s push for independence, EUR/USD may exhibit a more bullish behavior ahead of the next European Central Bank (ECB) meeting on October 26 as President Mario Draghi and Co. appear to be on course to alter the monetary policy outlook. The Governing Council may lay out a more detailed exit strategy as central bank officials show a greater willingness to conclude the quantitative easing (QE) program over the coming months, and the broader shift in EUR/USD behavior may continue to unfold over the coming months should the ECB continue to strike an improved outlook for the monetary union.

Keep in mind, it seems as though the Governing Council appears to be in no rush to remove the zero-interest rate policy (ZIRP) as ‘the September 2017 ECB staff projections indicated a somewhat slower path for inflation convergence than the June projections, on account of the stronger euro,’ and the central bank may largely endorse a wait-and-see approach in the first-half of 2018 as ‘a very substantial degree of monetary accommodation was still necessary for inflation pressures to build up.

EUR/USD Daily Chart

EUR/USD Daily Chart

DailyFX 4Q Forecasts Are Now Available

In light of the limited reaction to the Federal Open Market Committee (FOMC) Minutes, EUR/USD may continue to recoup the losses from earlier this month, with the pair at risk of making a run at the 2017-high (1.2092) as it carves a fresh series of higher highs & lows. With that said, a close above the 1.1860 (161.8% expansion) region may spur a move back towards 1.1960 (38.2% retracement), with the next topside hurdle coming in around 1.2130 (50% retracement). Will need to keep a close eye on the Relative Strength Index (RSI) as it approaches trendline resistance, with a break of the bearish formation raising the risk for a further appreciation in EUR/USD.

EUR/USD Retail Sentiment

EUR/USD Retail Sentiment

See how shifts in EUR/USD retail positioning are impacting trend- Click here to learn more about sentiment!

Retail trader data shows 36.4% of traders are net-long EUR/USD with the ratio of traders short to long at 1.75 to 1.

In fact, traders have remained net-short since April 18 when EUR/USD traded near 1.08123; price has moved 9.6% higher since then. The percentage of traders net-long is now its lowest since October 02 when EUR/USD traded near 1.17382. The number of traders net-long is 12.6% lower than yesterday and 8.1% lower from last week, while the number of traders net-short is 16.5% higher than yesterday and 6.7% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

For More Updates, Join DailyFX Currency Analyst David Song for LIVE Analysis!

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

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James Stanley , Currency Strategist

James Stanley
My Picks:  Bullish EUR/USD
Expertise:  price action - macro
Average Time Frame of Trades:  few days - few weeks

- For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.

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This setup looks to take advantage of the bigger-picture trend in the Euro while the U.S. Dollar remains in a rather precarious position. While the Dollar has been showing signs of strength since early-September, the bigger-picture down-trend remains in-tact, and with a decent slate of U.S. drivers coming-out this week, the potential for volatility remains high. We discussed the U.S. Dollar in considerable depth in this morning’s Market Talk, and we previously looked at a big batch of support that’s held the higher-low in EUR/USD, even during a rather climactic Non-Farm Payrolls release.

Bullish EUR/USD

While the Dollar has been driving-lower for much of 2017, the Euro has been rallying. When meshed together in EUR/USD, we can see a pair surging from a low below 1.0400 to start the year, to above the vaulted psychological level of 1.2000 just last month. But since running into that level at 1.2000, bulls started to get shy, and the pair finally put in some form of retracement after the breakneck pace of gains in the five months prior.

We’ve been following a key zone of support in EUR/USD that runs from 1.1685-1.1736. Also of interest is the 23.6% retracement of the 2017 bullish move that shows at 1.1679, which had helped to set the low last week. This opens the door for bullish setups, and traders can look to place stops on the position either a) underneath the confluent batch of support and below the August low at 1.1662 or b) below the previous swing-low at 1.1612 to give the position a bit more room to work.

Top-side targets can be set to 1.1833 (break-even stop move), followed by 1.1900, 1.2000 and then 1.2085.

EUR/USD Daily

Bullish EUR/USD Holding Confluent Support

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

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Nick Cawley , Analyst

Nick Cawley
My Picks:  Bullish GBP/JPY on Correction - Update
Expertise:  Technical and Fundamental Analysis
Average Time Frame of Trades:  One Day to One Month

Check out our new Trading Guides: they’re free and have been updated for the third quarter of 2017

** Update **

We entered this trade on Thursday October 5 at 148.10 and remain long despite the move lower to 146.960 on Friday - our stop-loss remains at 146.70. Upside targets of 151.65 and 157.80 remain in place.

Original Piece - September 20.

GBP/JPY has made a quadruple-top over the last week around the 151.50 level and needs an additional impulse to push it higher. Having rallied from 139.35 just under one-month ago, with the uptrend accelerating from Monday September 11, the market is still trying to find a new equilibrium. Looking at the stochastic indicator, the pair are in overbought territory – understandably after the recent surge higher – and the first Fibonacci retracement level kicks in at 148.70, just ahead of the 148.10 May 11 high.

Chart: GBPJPY Daily Timeframe (May 7 - September 20, 2017)

Bullish GBP/JPY on Correction Lower

Chart by IG

And on the weekly chart, the 151.65 double bottom on April 4 and June 6 2016 also come into play, providing another level of resistance. The stochastic indicator also confirms the pair in overbought territory.

Chart: GBPJPY Weekly Timeframe (June 22, 2015 – September 20, 2017)

Bullish GBP/JPY on Correction Lower

Chart by IG

While we remain bullish GBPJPY on a longer term basis, we look for the market to correct back to the 148.10/148.70 level before it retests the current resistance at 151.50/151.65 before pushing ahead to test the June 6 2016 high of 157.85.

Entry Point: 148.10 (May 11, 2017 high)

Target 1: 151.65 (Cluster of April 4 – June 6, 2016 lows/September 2017 quadruple tops)

Target 2: 157.80 (Just below June 6, 2016 high)

Stop-Loss: 146.70 (September 13, 2017 high)

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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