Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access all of our platforms from a single Saxo account.
Technical Update - USDJPY: Trend exhaustion or continuation? EURJPY and GBPJPY stuck in ranges – which way will they break out?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
USDJPY:
Key question is: Was that the exhaustive sell-off, or is there more to come?
Despite forming what appeared to be a bottom and reversal pattern last week, USDJPY was hit by another round of selling, pushing the pair down to just a few pips above the 0.786 retracement of the early-August rebound at 143.33.
According to RSI, which is showing negative sentiment and no divergence, there is the possibility of lower USDJPY levels.
If sellers push the pair below 143.30, another sell-off could occur, pushing the price down to August lows.
If USDJPY breaks above, and closes above, the upper falling trendline, a bullish move up to the 0.618 retracement at 147.12, maybe even up to the 0.786 retracement at 148.12, could be seen (black Fibonacci levels).
Key question is: Was that the exhaustive sell-off, or is there more to come?
Despite forming what appeared to be a bottom and reversal pattern last week, USDJPY was hit by another round of selling, pushing the pair down to just a few pips above the 0.786 retracement of the early-August rebound at 143.33.
According to RSI, which is showing negative sentiment and no divergence, there is the possibility of lower USDJPY levels.
If sellers push the pair below 143.30, another sell-off could occur, pushing the price down to August lows.
If USDJPY breaks above, and closes above, the upper falling trendline, a bullish move up to the 0.618 retracement at 147.12, maybe even up to the 0.786 retracement at 148.12, could be seen (black Fibonacci levels).
EURJPY:
EURJPY tested the support at around 160.55 once again, only to bounce, staying within the range with resistance at around 164.00.
A breakout from that range is required for direction.
The strength indicator, RSI is showing negative sentiment with no divergence, indicating that EURJPY will likely break out bearish. If it does, expect a sell-off down to the 0.618 retracement at 158.03, possibly down to the 0.786 retracement at 156.44.
In case of a bullish breakout, i.e., a close above 164.00, EURJPY is likely to push to strong resistance at around 168.00.
EURJPY tested the support at around 160.55 once again, only to bounce, staying within the range with resistance at around 164.00.
A breakout from that range is required for direction.
The strength indicator, RSI is showing negative sentiment with no divergence, indicating that EURJPY will likely break out bearish. If it does, expect a sell-off down to the 0.618 retracement at 158.03, possibly down to the 0.786 retracement at 156.44.
In case of a bullish breakout, i.e., a close above 164.00, EURJPY is likely to push to strong resistance at around 168.00.
GBPJPY:
GBPJPY is once again testing resistance at around 192.00. A break above could lead to a buying spree, lifting the pair higher to the 0.786 retracement at 195.35.
If rejected at the 192.00 resistance and instead sliding lower, taking out 189.30, expect a sell-off down to the 0.618 retracement at 184.65 (orange Fibonacci levels).
An RSI close back below the 40 threshold could be the first warning of the bearish scenario to play out
GBPJPY is once again testing resistance at around 192.00. A break above could lead to a buying spree, lifting the pair higher to the 0.786 retracement at 195.35.
If rejected at the 192.00 resistance and instead sliding lower, taking out 189.30, expect a sell-off down to the 0.618 retracement at 184.65 (orange Fibonacci levels).
An RSI close back below the 40 threshold could be the first warning of the bearish scenario to play out
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.