Analys från DailyFX
Price & Time: GBP Leading the Way?
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:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD has broken away from the 1.3000 6th square root progression of the year-to-date high
- Our trend bias remains lower, but weakness below the 78.6% retracement of the May to June advance near 1.2925 is needed to maintain the immediate downside tack
- Medium-term focused time cycle studies indicate early next week is a turn window of some importance
- The 61.8% retracement of May to June move higher at 1.3030 is now immediate resistance
- However, only over 1.3125 turns us positive on the Euro
Strategy: Like holding short positions while below 1.3125
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- NZD/USD continues to consolidate above the 78.6% retracement of the June to April advance in the .7715 area
- Our trend bias remains lower, but traction below .7715 is desperately needed to trigger more meaningful downside momentum
- Cycle studies point to early next week as a potential turn window in the Kiwi
- The 2nd square root progression of last month’s low in the .7860 area remains key near-term resistance
- Only clear strength above this level would turn us positive on the Bird
Strategy: Like being square for the time being. May look to go long next week if the Kiwi reacts well during the turn window.
EUR/CHF:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/CHF has moved steadily higher since finding support in late June at the 78.6% retracement of the April to May advance near 1.2235
- Our trend bias is lower while below the 1×2 Gann angle line of the year-to-date high in the 1.2355 area
- The 50% retracement of the late June advance near 1.2300 needs to give way to set up a downside resumption
- Very near-term focused cycles favor strength for a few more days
- However, only a close over 1.2355 suggests a trend shift and turns us positive on the cross
Strategy: Only small short positions favored while below 1.2355.
Focus Chart of the Day: GBP/USD
Cable traded to its lowest level in over a month on Wednesday before rallying sharply from just under the 78.6% retracement of the May – June advance at 1.5165. The action is interesting from a short-term cyclical perspective as often times Sterling acts as a leader. As we noted yesterday, the broader cyclical outlook seems to favor a USD peak sometime around late this week or early next week. The current strength in the Pound suggests early/mid next week is now probably the more likely timeframe as another day or so of strength looks likely before the next move lower into the medium-term turn window. Aggressive strength over 1.5400 would signal that the rate has bottomed early. This looks less likely.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the Yen 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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