Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank Group
Summary: USDJPY and CADJPY have formed bottom and reversal patterns, reverse to uptrend or merely just a correction? EURJPY triangle pattern - break out needed for direction.
Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team
USDJPY has formed a morning Doji pattern (circled) which is an indication of a bottom and reversal. A reversal that will have overhead resistance with the 21 and 100 daily Moving Averages coming down. However, a spike up to the 0.618 retracement at around 134,75 could be seen.
Medium-term USDJPY is in a downtrend but if the week ends with a close above 132.10 weekly candle will have formed a Bullish Engulfing candle which will have potential to reverse the bearish picture. However, to reverse to a medium-term uptrend a close above 137.95 is needed. However, if USDJPY closes above the 55 moving average it is a strong indication that use UDJPY will revert to bullish trend.
Weekly RSI is showing negative sentiment indicating USDJPY downtrend is not yet over. Bottom line; technical picture is a bit muddy.
A move below 129.60 will result in the downtrend to resume with a likely test of the 127 level.
EURJPY seems to be forming a medium-term symmetrical triangle easier seen on the weekly chart.
Weekly RSI has been showing divergence for months but if EURJPY breaks bullish out of the triangle and above 145.60 that is likely to be traded out and EURJPY to move to 152.60.
EURJPY is above the weekly cloud and 55 weekly MA i.e., in uptrend, but if the pair breaks bearish out of the triangle and closes below 138.80 a move down to around 135 could be seen with support at around 137.40.
Short-term EURJPY seems indecisive jumping above and below all Moving Averages and the cloud (shaded area) . However, RSI is showing positive sentiment and MACD line is about to cross over the Signal line which indicate upper falling trendline in the triangle is likely to be tested.
CADJPY started the week with forming a Bullish Engulfing candle after dipping below support at around 94.65. Short-term bounce to the 0.618 retracement at 98.27 seems likely. However, there is overhead resistance in the form of 21 and 55 MA’s coming down.
Medium-term on weekly CADJPY is in the process of forming a Bullish Engulfing. RSI divergence supports the bounce that could end with CADJPY resuming uptrend. A close above 100.90 will confirm that scenario. If that plays out CADJPY has formed a Double Bottom pattern with upside potential to 106-107.
If CADJPY slides back to close below 94.65 down trend is to resume. Support at around 92.65 but downside risk to support 87.00
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)