Analys från DailyFX
Price & Time: Cycle Turn Window in EUR/USD Today
Talking Points
- Important potential cycle turn window in the Euro
- Cable trades to new 9-month highs
- USD/JPY threatening critical support level
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Focus Chart of the Day: EUR/USD
EUR/USD has been unable to gain much traction over the 7th square root progression of the year’s low in the 1.3645 area. With today being a clear medium-term cycle turn window for the single currency we will be on the lookout for any potential signs of a top. The lack of any real extreme sentiment in the rate as evidenced by a sub 70% DSI reading is not our ideal setup for a trending instrument into a turn window. Nevertheless, there are plenty of potential momentum divergences on the daily that suggest the rate is vulnerable here. A level that we will be watching closely over the next couple of days is the 78.6% retracement of the year-to-date range at 1.3500. Weakness below there would be an initial sign of a top. The real clear level on the downside, however, is the 2nd square root progression of the year’s high at 1.3475. Strength after Wednesday above 1.3600 would invalidate the turn window.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY has come under steady pressure since failing near the 78.6% retracement of the July to August decline at the beginning of last month
- A confluence of several key Gann and Fibonacci levels near 97.50 is major support and while above this level our trend bias is higher
- A move back over the 50% retracement of the July to August decline at 98.95 is needed to re-invigorate upside prospects
- The second half of the week is an important cycle turn window for the exchange rate
- A daily close below 97.50 would turn the technical outlook to negative
USD/JPY Strategy: Like the long side while above 97.50.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD overcame Gann resistance at 1.6240 on Tuesday to trade to a new 9-month high on Tuesday
- Our trend bias remain positive on Cable while above the 1×4 Gann angle line of the year’s low in the 1.6020 area
- A daily close over Gann resistance at 1.6140 is needed to prompt the next push higher towards attractions at 1.6040 and above
- A medium-term cycle turn window is seen around the end of the week
- Weakness below 1.6020 would warn that a more important correction is commencing
GBP/USD Strategy: Like the long side while over 1.6020.
Price Time Analysis: SP 500
Charts Created using Marketscope – Prepared by Kristian Kerr
- SP 500 tested the 3rd square root progression of the June low at 1673 on Monday before rebounding aggressively to close back above critical support at 1680
- While above the 50% retracement of the August/September range at 1680 our near-term trend bias will remain higher
- Traction over 1710 is needed to re-invigorate upside prospects
- A minor cycle turn window is seen today and early next week
- A daily close below 1680 would turn us more negative on the index
SP 500 Strategy: Like the long side whilst above 1680.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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
Looking for a way to pinpoint sentiment extremes in the SPX in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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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