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Sentiment Snapshot (Europe): GBP/USD, EUR/JPY, GBP/JPY

Sentiment Snapshot (Europe): GBP/USD, EUR/JPY, GBP/JPY

Richard Snow, Markets Writer

Multi-Asset Sentiment Focus:

  • GBP/USD: Strong long-term uptrend – 65% short positioning
  • EUR/JPY: Consolidation near recent swing high – 69% short positioning
  • GBP/JPY: Recent break above trendline support – 68% short positioning
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GBP/USD Sentiment Analysis

Summary: Long term bullish momentum considered alongside recent changes in longs/shorts provides a mixed signal according to IG Client Sentiment

Sentiment Snapshot (Europe): GBP/USD, EUR/JPY, GBP/JPY

Cable has enjoyed a prolonged period of gains against the US dollar during the last quarter of 2020 and the early days of 2021 thus far.

The chart below shows how price action has traded within an ascending channel with regularity as higher highs and higher lows were established. Recently, after bouncing off of channel support, the market made another attempt at the 1.3700 level.

A break above could result in a continued bullish move towards the upper bound of the channel; while failure to close above 1.3700 brings into focus the lower bound of the channel and the 1.3450 level.

Take a look at our latest GBP/USD analysis from Martin Essex

GBP/USD Daily Chart

GBPUSD daily chart

Chart prepared by Richard Snow, IG

  • Trader net positioning: 65% Short(bullish according to contrarian analysis)
  • Weekly change in longs/shorts: -0.17%/-8.9%
  • Daily change in longs/shorts: -33%/+38.7%

Positioning remains short, on aggregate, despite the long term uptrend.

GBPUSD sentiment
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EUR/JPY Sentiment Analysis

Summary: Trading near the recent high coupled with combined net positioning and recent changes in sentiment, IG Client Sentiment provides a EUR/JPY bullish contrarian bias

Sentiment Snapshot (Europe): GBP/USD, EUR/JPY, GBP/JPY

EUR/JPY, unlike GBP/USD, saw most of its bullish momentum playout in Q2 and Q3 of 2020. Since then price action has been rather choppy, trading down to 121.60 before making a new high at around 127.50.

The chart below highlights the 125.15 level which looks to hold some significance as an inflection point. While the market isn’t advancing with the same bullish momentum as it did in Q2 and Q3 last year, calling a reversal before a break below 125.15 may be premature, especially when the stochastic oscillator has broken above oversold territory.

EUR/JPY Daily Chart

EURJPY daily chart

Chart prepared by Richard Snow, IG

  • Trader net positioning: 69% Short(bullish according to contrarian analysis)
  • Weekly change in longs/shorts: -23.44%/ +29.25%
  • Daily change in longs/shorts: -4.44%/ +33.66%

Positioning remains heavily short, on aggregate,as the market shows little concrete indication of a reversal for the time being.

EURJPY sentiment

GBP/JPY Sentiment Analysis

Summary: Sterling has continued its bullish move and when considering net positioning and recent changes in sentiment, IG Client Sentiment provides a bullish GBP/JPY trading bias

Sentiment Snapshot (Europe): GBP/USD, EUR/JPY, GBP/JPY

The Pound Sterling has also advanced against the Japanese Yen, trading in a wedge-like formation.

More recent price action has broken above the upper trendline (resistance), dropped back below and has once more approached the level of resistance. A break and close on the daily chart may propel the market toward the September swing high of 142.70, while failure to do so may bring into focus the 140.90 and 140.00 levels of immediate support.

GBP/JPY Daily Chart

GBPJPY daily chart

Chart prepared by Richard Snow, IG

  • Trader net positioning: 68% Short(bullish according to contrarian analysis)
  • Weekly change in longs/shorts: -9.35%/+14.95%
  • Daily change in longs/shorts: -20.75%/+17.68%

Positioning remains short, on aggregate, despite the long term uptrend.

GBPJPY sentiment.
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--- Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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