Analys från DailyFX
EUR/USD in Focus Ahead of Draghi and US Consumer Confidence
Talking Points:
– EUR/USD trading above potential support around the 1.0800 area
– Draghi could drill down message that taper is not coming soon, Fed hike speculation in focus as well
– Learn good trading habits with the “Traits of successful traders” series
The EUR/USD is edging slightly higher today after the pair took another leg lower following last week’s ECB rate decision, in which Draghi signaled the central bank isn’t looking to taper its QE program in the near term.
This puts the focus on the Draghi comments later today, but US Consumer Confidence and Fed’s Lockhart are also on tap.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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US Consumer Confidence is set to hit the wires 14:00 GMT. The assessment of consumer sentiment is expected to show a decline in confidence for a 101.0 print from the prior 104.1 figure. Together with comments from Fed’s Lockhart later today, the numbers may put Fed rate speculation is focus, but with the more significant GDP release this coming Friday, influence may be muted.
This seems likely to put the spotlight on the Draghi speech in Berlin for potential market moving influence on the pair.
The Euro moved lower following last week’s ECB rate decision, in which Draghi emphasized that the bank isn’t looking to taper its QE program in the near term, but rather work on ensuring the smooth implementation of the program.
Another lean to a more dovish tone by the European Central Bank president might see the pair edge lower again.
EUR/USD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. Despite seeing implied and historical volatility pick up recently, the pair is still expected to be less volatile than other major crosses. 20-Day ATR readings as well are still sitting at subdued levels.
In turn, this may imply that longer term tech levels may still hold.
EUR/USD 30-Min Chart: October 25, 2016
(Click to Enlarge)
The EUR/USD is trading between the 1.0900 resistance and 1.0860-1.0850 support in the short term.
Other resistance levels to watch might be 1.0920, the zone above 1.0950 and the 1.10 level.
The major area of support in the short term seems to be the area between 1.0820 to 1.0800.
In the short term, GSI is showing similar momentum patterns moved to the upside significantly more often than not.
The GSI indicator above calculates the distribution of past events outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
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
—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.
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 cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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 cvecchio@dailyfx.com
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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