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Price & Time: Capitulation or Just a Minor Correction in Gold?

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This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

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Foreign Exchange Price Time at a Glance:

EUR/USD:

PT_gold_capit_body_Picture_4.png, Price amp; Time: Capitulation or Just a Minor Correction in Gold?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD continues to meander around the 6th square root progression of the year-to-date high in the 1.3015 area
  • While below the 2×1 Gann angle line of the year’s high in the 1.3175 area our trend bias is lower
  • The 4th square root progression of last month’s high in the 1.2950 area remains a key downside pivot with weakness below required to trigger the next more pronounced decline
  • A slew of minor cycle turn windows this week suggests trading will become more choppy over the next few days
  • However, only a close above 1.3175 alters the immediate negative technical structure and turns us positive on the exchange rate

Strategy: Short positions favored while below 1.3175.

AUD/USD:

PT_gold_capit_body_Picture_3.png, Price amp; Time: Capitulation or Just a Minor Correction in Gold?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • AUD/USD broke below the 38% retracement of the 2008 to 2011 in the .9135 area on Friday to trade to its lowest levels since September of 2010
  • Our trend bias remains lower in the Aussie while below .9295
  • Support was found early on Monday at the .9115 261.8% extension of the early June advance and weakness below there is needed to prompt the next serious decline
  • However, near-term cycle studies favor strength over the next couple of days
  • Immeidate resistance is seen around .9215, but only over .9295 turns us positive on the Aussie

Strategy: Continues to flirt with long-term support levels. Want to see how the rate reacts around these levels before positioning more aggressivley.

EUR/GBP:

PT_gold_capit_body_Picture_2.png, Price amp; Time: Capitulation or Just a Minor Correction in Gold?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/GBP re-tested the 78.6% retracement of the April range in the .8585 area on Monday
  • A clear break of this level is required to shift our trend bias higher
  • However, traction over the 2nd square root progression of the year-to-date high at .8625 is required to signal the start of a more significant directional move higher
  • The extreme choppy trading over the past three months has muddled the cycle outlook, very near-term focused counts suggest Tuesday is a minor turn window
  • The 3rd square root progression of the year’s high in the .8535 area is immediate support, but weakness below .8470 is required to promp a more aggressive decline

Strategy: Like the short side following Wednesday key break, but not at these levels.

Focus Chart of the Day: GOLD

PT_gold_capit_body_Picture_1.png, Price amp; Time: Capitulation or Just a Minor Correction in Gold?

The high volume decline in Gold into quarter-end had all the hallmarks of a large calendar conscious entity liquidating a position. Whether this ends up being a true “capitulation low” or just a minor correction likely depends on how the metal reacts around key long-term support turned resistance in the 1270 to 1301 area. Traction over 1301 would signal an important low is in place. From a cyclical perspective the break of key “time support” last Wednesday has put the metal in a very negative position. While a minor Gann cycle relationship did exist at the end of the week, the next cyclical window of importance really looks to be around mid-July. Back under 1180 brings a deeper decline over the next few weeks back into play.

Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Need guidance managing risk on trades? Download the free Risk Management Indicator.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

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

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You can follow Paul on Twitter at@PaulRobinonFX.

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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 cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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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 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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