Analys från DailyFX
EURUSD Possibly Repeating 2010-2011 Trading Pattern
EURUSD price pattern since the 2012 low is nearly identical to price pattern off of the 2010 low. If the pattern continues, then the EURUSD will trade above the February high in the coming months before reversing lower again.
EURUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Wrote last week that “1.3047 is minor resistance with 1.3133 probably a bit more important. Focus later in the month centers on 1.3320/40 (former pivot and 61.8% level). It’s worth mentioning that a JS Spike (key reversal with a specific volatility condition) formed this week. This is only 5th such occurrence since 2011. The 4 previous ones the weeks of the January 2011 low, 2011 high, mid-September 2011 (false), and 2012 low.” This week’s follow through on the reversal argues for additional gains. The recent low is in line with significant lows of recent years. Here is where things get interesting; price pattern since the 2012 low is strikingly similar to price pattern off of the 2010 low. In both instances (see below chart),
- the initial rally from the low was in 3 waves
- the subsequent decline was sharp but bottomed short of the 61.8% retracement
- the secondary low (last week) was marked by an outside week reversal / JS Spike
FOREX Trading Strategy: May not get the opportunity to buy between 1.2934 and 1.2985 so looking for an early week low. The Daily Technicals will update developments. Declines on news often offer good entries as well. There are also opportunities in EURGBP and EURAUD.
EURUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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USDJPY
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The USDJPY has responded to the 50% retracement of the decline from the 2007 high. Yesterday’s technicals explained that “a sharp drop for at least 1 day may be near as price traded into the 50% retracement of the decline from the 2007 high on a small range and ended the day little changed (call it a doji or whatever…the point is that momentum slowed at an important reference point).” 98.50 is the minor pivot…weakness below there would shift focus to the gap at 97.82 and uncovered close at 97.52.
“Over the long term, there is a lot more upside. Remember, the decline from 2007 was a 5th wave terminal thrust. The implications are for a return to the 4th wave extreme, which isn’t until 124.13 (end of pattern) or 147.66 (price extreme).”
FOREX Trading Strategy: Look to the left of the chart and you’ll notice a circled area. That area is just after the breakout that followed the initial pullback after the 2005 low. The point I’m trying to get across is that there will be pullbacks. Near term, the upward sloping channel (see below) provides a point of reference to trade from. The channel is of smaller degree than the one that was broken in December but the trading logic is the same. That is, watch the top side of the channel (at about 98.25 on Monday) for support. In summary, 97.50-98.50 is a zone to keep in mind as near term support.
USDJPY
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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Gold
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The emotions that surround the gold decline are typical of sentiment extremes and market turns BUT this is a market that the public has been heavily involved in for years and may therefore require additional downside. Levels of interest include where the decline would consist of 2 equal legs from the all-time high at 1398, the 2011 low at 1308.45. Ultimately, 1156/87 is a level that could produce an important low. This level is defined by the 161.8% extension and 61.8% absolute retracement (1921.49 x .618).
FOREX Trading Strategy: 1508/25 is resistance and price needs to stay below Friday’s 1565 low in order for this breakdown to remain valid.
Gold
Monthly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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AUDUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: No change: “The AUDUSD remains well supported. The reversal at structural support on Monday (former 4th wave) is bullish. The longer that the AUDUSD spends trading around the trendline from the 2011 highs, the more one must consider the possibility of an upside breakout.”
FOREX Trading Strategy: Went long on 4/9 and would like to see price stay above former range high if 1.0496 on daily closing basis but 1.0345 is the stop for now. A measured objective based on the range since August is 1.1135. If price can break through then breakout systems are of interest.
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
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Jamie is the author of Sentiment in the Forex Market.
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
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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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