Hashimoto Kosei's "FX Outlook" 2017/9/4

Kosei Hashimoto's 'FX Outlook'  2017-09-04 08:55

Broadcaster: Daily Market (Kosei Hashimoto)

Today the NY market is closed for a three-day weekend. Trading will thin out in the latter part of London time (after 22:00 Tokyo time).

【USD/JPY】

(Strategy) Dollar range; looking for dollar-selling opportunities from this week onward

(Comment)

The USD/JPY weekly chart ends with a bullish candle, but upside is capped by the three moving averages, and the downside is squeezed into a firm range. There may be attempts to break out of the range this week as well, but it remains unclear whether a breakout will occur.

This week’s range is 108.20–111.70 yen, with the core range effectively 108.90–110.70. In the weekly and monthly trends, the dollar is trending lower, and selling into rallies remains in effect. During the week, around 110.50, sell on rallies; increase selling in the 111 yen area, with a stop at 112.45. If the stop range is large, pause at 111.15 once and re-enter selling in the mid-111s.

The downside is around 109 yen; we will close shorts near there, and this week if it reaches 108.30–108.40 we will lightly go long. However, this 108-yen low is the third attempt, so caution. Stop at 107.85.

Today in the 109.10–110.30 range, it will be decided whether to fill the gap at Friday's close of 110.25. If this gap is not filled by the latter part of the week, a low in the 108s is quite possible.

Today, selling on rallies around 110 yen, with a stop at 110.95. Stops can follow the weekly strategy. For the downside, take a light long below 109.30 in Tokyo time. Stop at 108.85.

【EUR/USD】

(Strategy) Euro range, contrarian trading

(Comment)

The EUR/USD weekly candle ends with a long upper wick, suggesting that the euro has seen its top. If it does not close above 1.1951 by week’s end, moving above 1.20 will be difficult for a while. Therefore, the euro becomes a buying-the-dip setup.

There is strong support at 1.1810–1.1820, so breaking this would deepen the pullback.

This week the range is 1.1710–1.2070; lightly go long around the early 1.18s, with a tight stop at 1.1785; if the stop is hit, look for a dip-buy around 1.1720. Close the long quickly. Alternatively, use the former to lightly go long and add above 1.17x. Stop at 1.1675.

Resistance at 1.1950, 1.2010, 1.2070. In the 1.20s, close out longs; if price remains above 1.2020, lightly short. Place a stop at 1.2090, but if it stays above 1.1960 into Friday, close out.

Today in the 1.1820–1.1930 range, it’s contrarian. Sell into the rally around 1.1920; stop at 1.1965. On the downside, buy the dip around 1.1820–1.1830; stop at 1.1775.

This week there is ECB policy on the 7th, so even if it moves in one direction on Monday-Tuesday, there should be position adjustments ahead of the ECB.

【Euro/Yen】

(Strategy) Euro range; watch for a one-sided breakout on ECB

(Comment)

The EUR/JPY weekly chart forms a doji near the highs, with the upper wick breaking out during a Bollinger squeeze. A slight expansion in movement is starting, making a one-way move more likely. Whether the monthly hanging-man will be a false breakout or a large euro rally correction will be decided at the ECB.

This week’s range is 128.10–131.80; selling around the mid-131s with a stop at the NY Friday close around 132, or alternatively at 132.55 intraday. Positions should be kept light. Basically, buy the dips in the low-128s with a stop at 127.65. If this is hit, the hanging-man pattern becomes valid.

Today in the 129.60–130.90 range, buy the dip around 129.70–129.80 with a stop at 128.95. Selling is on hold.

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