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Price & Time: How Long Can the Consolidation Continue?

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Talking Points

  • Kiwi respecting Gann levels on both sides
  • EUR/USD in consolidation mode
  • GBP/USD stalls again at Gann resistance

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Focus Chart of the Day: NZD/USD

pt_nx_body_Picture_4.png, Price amp; Time: How Long Can the Consolidation Continue?

In our Tuesday commentary we wondered whether the Kiwi had peaked a little early as a cycle turn window was approaching around the middle of the week. Follow through weakness on Wednesday below the 2nd square root progression of last week’s high was further confirmation of a top. However, the Bird was not able to breach the 3×1 Gann angle line of the year’s high around .8220 leaving a possible low during the turn window on the daily chart. A move in the days ahead below .8220 is needed to fully negate the possibility (albeit remote) of cyclical inversion and pave the way for a deeper correction towards attractions at .8115 and below. While not our favored scenario, a close over .8375 would confirm a meaningful low.

Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

pt_nx_body_Picture_3.png, Price amp; Time: How Long Can the Consolidation Continue?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD continues to consolidate in a sideways to lower range below the 7th square root progression of the year’s low at 1.3545
  • Above the1st square root progression of the September high at 1.3445 our near-term trend bias will remain positive on the Euro
  • The 1.3545 remains a clear near-term pivot with traction above needed to trigger and advance towards upside attractions at 1.3600 and 1.3670
  • The first half of next week is a medium-term cycle turn window
  • Only weakness below 1.3335 on a daily close basis will turn the chart more clearly negative

EUR/USD Strategy: Like the long side while over 1.3445.

Price Time Analysis: GBP/USD

pt_nx_body_Picture_2.png, Price amp; Time: How Long Can the Consolidation Continue?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • GBP/USD re-tested the 11th square root progression of the year’s low at 1.6135 this morning before coming off
  • Our near-term trend bias remains higher in Cable while a convergence of multiple Gann levels in the 1.5960 area
  • The 1.6135 progression level and the 1.6170 88.6% retracement of the year’s range are now clear upside pivot levels with strength above needed to signal the start of another leg higher
  • A very minor cycle turn window is seen today
  • A daily close below1.5960 would warn that Sterling has peaked ahead of schedule

GBP/USD Strategy: Like the long side whilst over 1.5960.

Price Time Analysis: SP 500

pt_nx_body_Picture_1.png, Price amp; Time: How Long Can the Consolidation Continue?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • SP 500 has come under steady downside pressure since failing last week at Fibonacci projection resistance at 1735
  • Our near-term trend bias is higher in the index while above the 50% retracement level of the August to September advance at 1680
  • The August high of 1710 is important resistance with a close over this level needed to confirm a resumption of the underlying uptrend
  • Minor cycle turn windows are seen at the beginning and end of next week
  • A daily close below 1680 would warn that a more aggressive correction is occurring

SP 500 Strategy: Like the long side while 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

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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