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EUR/USD Flirts with Monthly Close Under 30 Year Trendline

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  • GBP/USD takes the stairs down
  • AUD/USD penetrates 14 month trendline and pulls back
  • EUR/AUD about to rip?

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EUR/USD

Monthly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

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-While under the summer lows (1.0807/47), EUR/USD downside potential may be realized towards parity (parallel with line from 1995-2008 highs). In fact, those summer lows provided resistance earlier in November. Former support providing resistance is bearish but be aware of the 30 year trendline that EURUSD is sitting on. In other words, be quick to abandon a bearish bias and even turn bullish on a move through resistance (summer lows) lest you be run over by a rally similar in scope to the ones that have materialized from this line in the past. I’ve been tracking SSI down here too. Typically, SSI will register a reading near 2 (or -2 for a bull move) early in a trending move. Despite one of the strongest 20 day declines in recent years (20 day RoC was lower at the Jan and March lows), SSI hasn’t even spent much time above 1.5. The implication is that retail is hesitant to buy weakness. This isn’t necessarily bullish, but it’s not extremely bearish either.

-November ends on Monday and it’ll be interesting to see if the month closes under the 30 year trendline (arithmetic). The line is at about 1.0730. A move above there would indicate a hold of the long term support line and present a high reward/risk opportunity on the upside. My colleague David Rodriguez has done superb work on the importance of reward/risk as part of the Traits of Successful Traders series.

GBP/USD

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

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-No change to the most recent GBPUSD comments. “In line with the broader trend, 9 months of sideways trade in GBP/USD has resolved to the downside. Focus is on the lower parallel supports that cross lows over the last several years. In other words, focus is on a new low (below the April low). A break of the downward sloping lower parallels could set off a crash towards the 2009 low.”

AUD/USD

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

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-Recent AUD/USD comments were that “the dominant downtrend is very much intact but there have been prolonged periods of trading around this median line that gave way to decent counter trend moves (rallies). In other words, everything since the September low may very well be corrective but AUD/USD could trade in a more or less nonsensical range for a while longer before the downtrend attempts to reassert.” It’s also worth noting that AUD/USD is at a 14 month trendline. A break above could trigger a run towards longer term slope resistance (and the 55 week average) in the mid .7600s.

NZD/USD

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

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-NZD/USD is wedged between a long term resistance line (was support in January) and an even longer term support line. If this long term support gives way, then focus would shift to .5673 (combination of the next parallel and the 1999 high). However, recent developments give scope to a broad bottoming process. The Daily Techs asked “is this a trend change or just a bounce within the downtrend?That question might be answered with how the rate trades around .6455-.6500. The burden of proof is on bulls to step up in order to suggest that the last few months compose a bottoming process rather than just a bear market advance.” NZDUSD has responded positively to the mentioned support zone. As such, look higher while above .6428.

USD/JPY

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

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-FXTW wrote several updates ago that “immediate focus is on the long term upward sloping median line. This line has been support and resistance in the past. The late 2014 (BoJ on Halloween) advance commenced upon a break above this line as well. Point is, the line is a useful reference point…so pay attention!” This long term median line is now acting as resistance but the near term picture is positive whilst above 121.60 (breakout level). Weakness below there would once again bring a yearlong topping process into focus.

-The below chart displays a monthly USD/JPY log chart. The 4+ year bull has stalled at the line that connects the 1990 and 1998 highs. 12 month rate of change also exhibits divergence. Basically, technical observations on the monthly chart warn of a top.

USD/JPY

Monthly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

USD/CAD

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-There is no change to recent comments. “Recent USD/CAD action diminishes confidence in (but doesn’t destroy) the topping ‘idea’. New highs could carry to the next parallel near 1.38 (all-time high is 1.618…). Below 1.3175 would delay anything bullish until support near 1.2900 (slope line that crosses the February high, March high, and October low).”

USD/CHF

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

There is no change to recentUSD/CHF comments other than noting that 1.0100-1.0200 is support in the event of a pullback. “USD/CHF has broken out from a 7+ month triangle. The rate has stalled at the year open price. The triangle breakout objective is 1.1182.”

Bonus Chart

EUR/AUD

Weekly

EUR/USD Flirts with Monthly Close Under 30 Year Trendline

Chart Prepared by Jamie Saettele, CMT

Automate trades with Mirror Trader

-EUR/AUD has formed a weekly doji. More importantly, the bounce materialized off of a slope line that’s provided resistance and support at important junctures since early 2013 (resistance in February 2013 and April 2015 and support in June 2015). A special report on this and several other euro crosses will be posted to SB Trade Desk over the weekend. The report incorporates patented pattern matching technology from our partner EidoSearch.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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What’s inside:

  • EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
  • Resistance in vicinity of 11825/80 likely to keep a lid on further strength
  • Targeting the low to mid-11600s with more selling

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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

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Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail [email protected]

Follow him on Twitter at @CVecchioFX

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail [email protected]

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

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