Near-term Setups in USD/JPY, AUD/NZD, Ripple (XRP/USD)

Here’s an update on a few of the setups we’ve been tracking this week. For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy.

The Return of Yen Strength?

USD/JPY 120min Price Chart

I’m’ on the lookout for a near-term exhaustion on this rebound in the USD/ JPY setup highlighted in yesterday’s Scalp Report. For now the focus is on fading strength into confluence slope resistance at the 108-handle. A downside break of this channel is needed to get things going with such a scenario eyeing initial targets at the median-line / 50% retracement at 107.73.

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AUD/NZD Price Tumbles Towards Support

Stay short AUD/NZD with price now approaching initial support targets at 1.0662 & 1.0626. Look for initial resistance at 1.0740s with bearish invalidation up at 1.0771. I highlighted this setup including the near-term trading levels in today’s AUD/NZD Scalp Report.

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Ripple Price Slide to be Bought

XRP/USD 240min Price Chart

Last week I noted that, “the immediate advance looks a bit vulnerable here but the broader focus remains weighted to the topside while above the monthly / yearly low-day close. From a trading standpoint, I’ll favor fading weakness into structural support OR buying a break and retest of the median-line (1.2956) as support for a move back towards the 1.6177.” Ripple prices are breaking below confluence support at 1.0148 and the game-plan remains unchanged from my previous update. Look for initial support targets at 9003 backed by 8230 with bullish invalidation steady at 7600.

Ripple IG Client Positioning

• A summary of IG Client Sentimentshows traders are net-long Ripple- the ratio stands at +21.01 (95.5% of traders are long) – bearishreading
• Retail has remained net-longsince Dec 25th; price has moved 61.5% lower since then
• Long positions are 4.4% lower than yesterday and 4.6% higher from last week
• Short positions are 21.9% higher than yesterday and 2.5% lower from last week
• We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Ripple prices may continue to fall. Retail is less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed Ripple trading biasfrom a sentiment standpoint.

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-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or contact him at mboutros@dailyfx.com