Connect with us

Analys från DailyFX

Price & Time: Market Sentiment Too Bullish on USD?

Published

on

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.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

Foreign Exchange Price Time at a Glance:

USD/JPY:

PT_USD_Sentiment_body_Picture_4.png, Price amp; Time: Market Sentiment Too Bullish on USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY has moved steadily higher from the 93.80 88.6% retracement of the April to May advance over the past few weeks
  • While above 99.65 our trend bias remains higher in the exchange rate
  • A convergence of the 1×1 Gann angle line of the May high and the 8th square root progression of the June low in the 101.70 area is now a key near-term pivot and a close above is required to maintain the upside tack
  • A medium-term cycle turn window is seen over the next few days
  • The 100.65 level is immediate support, but only aggressive weakness below 99.65 alters the positive near-term technical structure and turns us negative on USD/JPY

Strategy: We like holding long positions while above 99.65, but we also like reducing them into this turn window.

USD/CHF:

PT_USD_Sentiment_body_Picture_3.png, Price amp; Time: Market Sentiment Too Bullish on USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CHF traded to its highest level in over a month on Tuesday before finding resistance just ahead of the 78.6% retracement of the May to June decline in the .9685 area
  • While above .9565 our trend bias will remain higher in USD/CHF
  • A clear break of .9685 is now needed to set off the next leg higher
  • However, the second half of the week looks like a clear medium-term cycle turn window and a change in trend looks possible during this time
  • A confluence of Gann and Fibonacci levels near .9565 is key support and only clear weakness below this level undermines the immediate positive tone and focuses lower

Strategy: We like holding long positions while the rate is over .9565, but we will start reducing them over the next few days.

XAU/USD:

PT_USD_Sentiment_body_Picture_2.png, Price amp; Time: Market Sentiment Too Bullish on USD?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • XAU/USD’s current recovery attempt has stalled out around the 2nd square root progression of the year-to-date low in the 1250 area
  • While the metal is below key longer-term retracements at 1282 and 1301 our trend bias will remain lower
  • The latter part of the month looks to be the next cyclical turn window of significance, but short-term cycles studies look generally positive
  • The 1st square root progression of the year’s low at 1214 is immediate support, but back under 1185 is needed to signal a broader downside resumption
  • Only strength above 1301 undermines the negative technical structure and turns us positive on the metal

Strategy: Minor short positions favored while below 1301.

Focus Chart of the Day: EUR/USD

PT_USD_Sentiment_body_Picture_1.png, Price amp; Time: Market Sentiment Too Bullish on USD?

One of our favorite metrics for analyzing extremes in sentiment is the Daily Sentiment Index (DSI) conducted by trade-futures. As a stand alone measure the contrarian index does an excellent job of identiying when markets moves have become overdone. However, we find that when it is combined with cyclical work it becomes even more useful. As we have highlighted in recent notes, the cyclical outlook suggests the dollar is susceptible to a turn of some kind this week against a multitude of different currencies. On Friday, DSI figures reached some rare extremes as EUR, GBP and XAU all printed single digit levels of bullishness (DXY printed 93%). Such one-way conviction is frightening from a contrarian perspective and increases our confidence that a cyclical correction is looming. In the Euro, Thursday or Friday looks like the idealized time for a low.

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

Looking for a way to pinpoint sentiment extremes in the Euro 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

Published

on

By

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.

Continue Reading

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

on

By

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

To be added to Christopher’s e-mail distribution list, please fill out this form

Continue Reading

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

on

By

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

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.