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Price & Time: Gold Falls Further, but Nearing Key Cyclical Inflection Point

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Talking Points

  • Gold nearing important turn window
  • USD/JPY tests key upside pivot
  • GBP/USD near-term trend bias turns negative

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Focus Chart of the Day: GOLD

PT_gold_nears_body_Picture_4.png, Price amp; Time: Gold Falls Further, but Nearing Key Cyclical Inflection Point

Gold has come under some further downside pressure this morning with the metal breaking blow key Gann support in the 1260 area to trade to its lowest levels since early July. While the technical outlook for XAU looks rather dire (especially if 1260 is broken on a close basis), our cyclical analysis suggests that bears need to tread with some caution over the next few days as a clear cycle turn window will be in effect over the second half of the week. As a reminder, cycle turn windows are points in time where we believe a change in trend can more easily develop. In addition to 1260, other levels we will be monitoring closely for a reaction during this cyclically significant period include the 1248 2nd square root progression of the year’s low, the 1239 5th square root progression of the August high and the 78.6% retracement of the June to August advance at 1234. Continued weakness into next week under 1234 would warn that a more serious decline is unfolding in the Gold market.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

PT_gold_nears_body_Picture_3.png, Price amp; Time: Gold Falls Further, but Nearing Key Cyclical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY rebound off the 7th square root progression of the year’s high at 96.60 has gathered pace over the past few days
  • Our near-term trend bias is negative while below the 50% retracement of the September to October decline in the 98.60 area
  • The 97.55 area is a more immediate downside pivot, but traction under 96.60 is really needed to signal the start of a more important distribution phase
  • A minor cycle turn window is in effect today
  • A daily close over 98.60 will shift our trend bias to positive

USD/JPY Strategy: More aggressive traders can look to sell into the 98.60 area. We will look to go long on a daily close over 98.60.

Price Time Analysis: GBP/USD

PT_gold_nears_body_Picture_2.png, Price amp; Time: Gold Falls Further, but Nearing Key Cyclical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD has come under fairly steady downside pressure since failing at the start of the month at gann resistance in the 1.6225 area
  • Subsequent weakness below the 2nd square root progression of the month-to-date high at 1.6005 has turned our near-term trend bias to negative in Cable
  • A convergence of the 1×3 Gann angle line of year’s low and the 3rd square root progression of the month’s high in the 1.5875 area is a clear downside attraction
  • Some minor turn windows are seen over the next few days, but the next important turn window looks to be late next week
  • A close over 1.6135 at any time would re-focus attention higher in GBP/USD

GBP/USD Strategy: Like the short side while below 1.6135. Will look to add on strength.

Price Time Analysis: NZD/USD

PT_gold_nears_body_Picture_1.png, Price amp; Time: Gold Falls Further, but Nearing Key Cyclical Inflection Point

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has moved steadily higher since finding support last week at .8230 during the cycle turn window
  • Subsequent strength through Gann resistance at .8340 has turned our near-term trend bias to positive in the Kiwi
  • The 9th square root progression of the year’s low at .8450 is a natural attraction/reaction level
  • A minor cycle turn window is seen around mid-week
  • It would take weakness below .8230 to undermine the immediate positve tone in the Bird and re-focus attention lower

NZD/USD Strategy: Like the long side whilst above .8230.

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 real time? Try the Speculative Sentiment Index.

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

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Analys från DailyFX

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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