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The beginning of the next leg? Setting EUR / GBP, EUR / JPY, EUR / USD

Euro outlook:

  • The technical evidence is EURThe elasticity of is in the rearview mirror.
  • A false bullish breakout may have occurred EUR / USD Price, both EUR / GBP When EUR / JPY Prices have already begun to push towards monthly lows.
  • Around the IG Client Emotion Index, Each major EUR cross has a different bias.

Resilience end period

The euro’s strength and resilience period in early 2022 may soon be nearing its end. Between EUR /USD Earlier this week, rates experienced a bullish breakout and there is increasing evidence that the movement is set to reverse. Coupled with the failure of EUR /GBP Rates and EUR / for meaningful progressJapanese yen If the rate has fallen to a new monthly low, the strength of the EUR / USD may be obscuring the problem elsewhere. There are still many underlying problems-mainly the European Central Bank’s refusal to raise interest rates in the face of high inflation-a new wave of euro selling may be ahead.

EUR / USD Rate Technical Analysis: Daily Chart (January 2021 to January 2022) (Chart 1)

The EUR / USD rate rose from the two-month triangle earlier this week, but did not rise significantly before it was hit by resistance in various ways. 50% Fibonacci retracement of low 2017 / high 2018. 50% Fibonacci retracement of low in 2020 / high in 2021. But perhaps most notably, Friday’s daily candlesticks are in the form of a swallowing bar outside the bear, which also means a bearish key reversal when entering after a breakout. A move below 1.1380 provides a strong confirmation signal that the bullish breakout of the EUR / USD has failed.

IG Client Sentiment Index: EUR / USD Rate Forecast (January 14, 2022) (Chart 2)

Euro Technical Analysis: Is the Next Leg Beginning? Setting EUR / GBP, EUR / JPY, EUR / USD

EUR / USD: According to retailer data, 48.99% of traders are net long and the ratio of short to long traders is 1.04 to 1. The number of Netlong traders is 8.45% less than yesterday and 13.32% less than last week. Meanwhile, the number of net short traders is 2.84% less than yesterday and 17.10% more than last week.

We usually disagree with the sentiment of the crowd, and the fact that traders are net shorts suggests that the price of the EUR / USD may continue to rise.

Traders are even less net short than yesterday or last week, and the combination of current sentiment and recent changes has strengthened the bullish contrarian trading bias of the EUR / USD.

Euro / Yen Rate Technical Analysis: Daily Chart (January 2021 to January 2022) (Chart 3)

Euro Technical Analysis: Is the Next Leg Beginning? Setting EUR / GBP, EUR / JPY, EUR / USD

The EUR / JPY rate is expected to be more bearish in the short term as it fails to meet its double bottom target at 131.92 and the pair is below the daily 21-EMA and hits monthly lows. Momentum indicators are declining rapidly, with daily MACDs issuing sell signals (although above the signal line). Daily slow stochastics are falling out of the overbought territory. The 50% Fibonacci retracement at 129.50 in the 2014 high / 2016 low range is the initial target decline, and the 2018 high / 2020 low range 128.68 38.2% Fibonacci retracement. Follows it.

IG Client Sentiment Index: EUR / JPY Rate Forecast (January 14, 2022) (Figure 4)

Euro Technical Analysis: Is the Next Leg Beginning? Setting EUR / GBP, EUR / JPY, EUR / USD

EUR / JPY: According to retailer data, 33.33% of traders are net long and the ratio of short to long traders is 2.00: 1. Netlong traders are 8.98% higher than yesterday and 15.74% lower than last week. Meanwhile, the number of net short traders is 29.32% less than yesterday and 2.15% less than last week.

We usually disagree with the sentiment of the crowd, and the fact that traders are net shorts suggests that the price of EUR / JPY may continue to rise.

Positioning has less net shorts than yesterday, but more net shorts since last week. The combination of current sentiment and recent changes further complicates the EUR / JPY trading bias.

EUR / GBP Rate Technical Analysis: Daily Chart (January 2021 to January 2022) (Chart 5)

Euro Technical Analysis: Is the Next Leg Beginning? Setting EUR / GBP, EUR / JPY, EUR / USD

The EUR / GBP rate remains below the previous channel support carved between March and December 2021 and cannot return above the 2021 low of 0.8368. Therefore, 2022 price behavior appears to have accumulated in the flat range. This is a flag pattern where the move to the previous descent suggests further losses in future sessions. There remains a case that “in the short term, there is a high possibility that further losses will occur toward 0.8282.”

IG Client Sentiment Index: EUR / GBP Rate Forecast (January 14, 2022) (Figure 6)

Euro Technical Analysis: Is the Next Leg Beginning? Setting EUR / GBP, EUR / JPY, EUR / USD

EUR / GBP: According to retailer data, 80.88% of traders are net long and the ratio of long to short traders is 4.23 to 1. The number of Netlong traders is 1.28% higher than yesterday and 12.80% higher than last week. Meanwhile, the number of net short traders is 3.02% less than yesterday and 1.75% less than last week.

We usually disagree with the sentiment of the crowd, and the fact that traders are netlong suggests that EUR / GBP prices may continue to fall.

Traders are even more net-long than yesterday or last week, and the combination of current sentiment and recent changes adds to the bearish contrarian trading bias on the EUR / GBP.

— Written by Christopher Vecchio, CFA, Senior Strategist



The beginning of the next leg? Setting EUR / GBP, EUR / JPY, EUR / USD

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