Intraday Market Analysis: Presenting Euro Yen and SP500

EURJPY Technical Analysis

Following the heavy selling in EUR pairs and crosses in the Forex market, EURJPY has closed below the neckline of a classic Head-And-Shoulders (H&S) reversal pattern. On most scenarios the price will re-test the breached neckline in before resuming the downtrend. What triggered the heavy EUR selling was Mario Draghi statements on Thursday in regards to expanding the Quantitative Easing (QE) program. The selling began as soon as the HICP projections were revised lower.

EURJPY 4hr Chart

Please click on the chart to enlarge:

EURJPY 4hr Chart 06/09/15

EURJPY 4hr Chart 06/09/15

EURJPY has painted a reversal pattern on the 4hr chart. This may suggest the price may post corrective gains towards the nearest resistance as drawn on the chart. We find it difficult to believe at the time of this writing Euro yen will have the required bullish momentum to break above the resistance, which may yield to corrective weakness towards 131.47. We should highlight we are uncertain whether the price will indeed correct higher but the 4hr chart presents a fair case for corrective gains.

SP500 Technical Analysis

Global indices suffered from extraordinary volatility in recent sessions, triggered by global uncertainty in regards to China’s economic growth. Since the SP500 recovered off its lows a bearish channel has been established on the 4hr chart.

SP500 4hr Chart

Please click on the chart to enlarge:

SP500 4hr Chart 06/09/15

SP500 4hr Chart 06/09/15

We would first highlight that bearish channel is unlikely to confine the SP500 into a tight range for a substantial period of time as the upcoming economic figures form China and the Fed monetary policy are likely to inject fresh volatility into the index. As a result we believe limited opportunities may manifest themselves. The most distinct entry may be when the price re-tests the 1,950 resistance. A successful re-test and a failure to break above may yield to corrective weakness towards the lower support of the bearish channel. Should the price re-test the lower end of the channel it is likely to do so with a long lower shadow (candlestick). If the shadow pierces  1,864 it will dent the possibility of corrective gains towards the upper resistance of the channel.

While breakout strategies may be exercised we estimate a bullish breakout to be more rewarding. A firm break above the upper resistance of the channel may pave the way for further gains towards 1,995.

The G20 meeting called not to devalue the currency exchange rates in the Forex market, hinting China to refrain from further devaluing the Yuan. Unfortunately, the currency wars are from over. Each central bank is doing its best to weaken its currency where most opt for verbal threats. Mario Draghi weakened the Euro by warning the QE may be expanded and we would expect the Fed to do the same at its coming monetary policy meeting.  We do not see the Fed hiking rates in September, which will in turn weakens the Us Dollar (USD) in the Forex market.

09/09/15 UPDATE: It appears the 4hr chart gave an early indication of the bullish trend in EURJPY despite our belief. The price breached multiple resistance levels and although it did stutter at 134.30 the resistance was taken out by the market, re-tested and strong gains took the price to 134.96 at the time of this writing.

Please click on the chart to enlarge:

EURJPY 4hr Chart 09/09/15

EURJPY 4hr Chart 09/09/15

09/09/15 UPDATE II: The SP500 breakout strategy was a better approach as we suggested. Although 1,950 prevented the price from breaking higher, the bulls were able to overcome the obstacle and lift the price towards our target.

Please click on the chart to enlarge:

SP500 4hr Chart 09/09/15

SP500 4hr Chart 09/09/15

When EURJPY and SP500 intraday strategies were published they were only available to traders that have signed up for our spot intraday strategies plan.



To view current and future intraday strategies sign up to our intraday plan. Sign Up 

More Intraday Strategies

Global Trade Alerts Performance