Analys från DailyFX
Looking for USD/JPY & SPX Turns, Positioning for GBPUSD Extension
Gold has found a ‘tradeable’ low. Early week focus is on positioning for a larger GBPUSD breakdown and identifying near term tops in the USDJPY and SP 500. Additional opportunities were discussed during Friday’s DailyFX PLUS webinar.
Gold
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Gold traded to 1180 last week, not far from the 200% extension of the 1322-1488 range (1156) and July 2010 low (1157). I noted in the Daily Technicals that “it’s been gold’s tendency since September 2012 to ‘crash’ for 2-4 weeks and consolidate for at least a month.” Gold stabilized this week after a 2 week crash so recent action fits the pattern. More importantly, the rally from the low is impulsive (see next chart) and the decline corrective. The post NFP drop stopped just below the high volume area of 1210 as well. It’s worth noting that gold has found important lows in July since 2009 and that COT positioning is at levels last seen in 2005.
FOREX Trading Strategy: Triggered long at 1215, stop 1180. In Friday’s webinar, I discussed how gold gold’s recent action is exactly what to look for in a turn.
Gold
Hourly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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GBPUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: From the 6/21 FX Technical Weekly – “Don’t lose sight of the big picture. A 4 year triangle (see next chart) was broken to the downside in February and price has returned to the breakout point. The GBPUSD completed an outside week. This is the first reversal from a 13 week price extreme since the week that ended 3/15 (low of the year so far). The GBPUSD is ahead of the EURUSD at this point. The GBPUSD topped in January…the EURUSD in February. The GBPUSD bottomed in March…the EURUSD in April. The GBPUSD made a high on 6/17 and the EURUSD made its high on 6/19. So it makes sense that the GBPUSD would fall apart before the EURUSD does. 5 waves down are visible from the high but when the GBPUSD turns, it tends to go quickly so beware of looking for a deep 2nd wave rally that never materializes.”
I got tripped up with the 7/3 outside day reversal but the market never followed through on that reversal (the reversal day was 7/3 and the market never traded above the 7/3 high). It’s not hyperbole to say that the GBPUSD has plummeted since. After 1.4830, the next big support isn’t until 1.4225/60.
FOREX Trading Strategy: In order to position for a larger breakdown, risk needs to be above the 7/3 high (1.5303). One way to make sure that you don’t sell too cheap is to use a 5 day moving average as a trigger point. 1.4960-1.5007 is also estimated resistance from Friday’s early morning low and 5/31 low. In summary, look for a weak bounce to position for the bigger breakdown.
USDJPY
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The USDJPY is nearing levels ripe for a sale. High volume areas are seen at 101.27 and 101.97. The 78.6% retracement of the decline from the high is 101.60. The underside of the November 2012-April 2013 trendline reinforces this area early next week as one to look for a top. It’s comforting that the SP 500 (see next chart) is at resistance defined by a trendline confluence (underside of 8 month trendline and line that connects the May and June tops).
FOREX Trading Strategy: Looking for a ‘tradeable’ top on Sunday / Monday.
SPX
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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— 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
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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