Analys från DailyFX
Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme
- EURUSD first long term bearish breakout attempt
- AUDUSD small range weekly reversal at long term support zone
- USDJPY wider consolidation could materialize
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Weekly
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-“BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.”
-EURUSD has now taken out the 2012 and 2010 lows. Only the 2005 low remains before ‘free-fall’ territory towards the 61.8% retracement of the rally from the 2000 low near 1.12. Given insanely one sided sentiment for an extended period of time however, this first attempt at the 2005 low may fail and give way to a much needed countertrend move.
-A number of calls for parity have been published recently. While the long term pattern suggests an eventual print near .90 (in 2016 or 2017), the sudden aggressively bearish calls come just after a record small speculator short position and record open interest in euro futures was recorded in November. The same COT profile was evident in May 2012, before the EURUSD bottomed in July. Aggressive forecasts are often published when it’s popular to do so, which means that the trend is embedded in the public consciousness to the point of extremity. The path to .90 or so won’t be smooth.
Weekly
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-“A period of congestion may be in order as price has bounced from near the 50% retracement of the advance from the 2013 low but the drop under 1.6050 produces a pivot high on 9/19 and allows one to draw a downward sloping channel.”
-Like EURUSD, GBPUSD is at a long term support and this is a good spot for a rebound.
Weekly
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-“AUDUSD was unable to hold a long term parallel. The risk is for lower prices with the May 2010 low at .8067 and the 2005 high at .7986 of interest as supports”.
-AUDUSD dipped as low as .8031 this week, which is within the .7927-.8067 long term support zone (2010 low to 50% of rally from 2001 low with 2004 and 2005 lows in between). A small range weekly key reversal is present, which may set the stage for a recovery.
Weekly
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-NZDUSD is bouncing from the October 2009 high but one can’t help but notice that a major double top is possible with a target of .5898. That would trigger on a drop below .7370. Near term, consolidation since September could be taking the form of a triangle or flat.
Weekly
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-“USDJPY has reached touched its 20 DMA for the first time since late October. Conditions are much more extreme than they were last year at this time but the 20 DMA propelled USDJPY higher last December before the big January decline.”
-USDJPY held up into the New Year and said January decline is underway. A sideways pattern could take hold between roughly 117 and 120.
Weekly
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-“USDCAD has propelled higher and is probably headed into upper parallels. Levels of interest on the upside are 1.1666 (Fibonacci) and 1.1723 (June 2009 high).”
-USDCAD took out both mentioned levels and is now testing the 2007 high and major upper parallel (the 61.8% extension of the 2007-2009 rally from the 2011 low is at 1.1882 as well). If a pullback is going to materialize, then it likely happens from here.
Weekly
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-“USDCHF has traded into median line support and former congestion (.9300-.9430). Start looking higher again. .9580 is resistance within the range and .9400/30 is support. A target level in the event of a new high is .9750.”
-USDCHF exceeded its .9750 objective and has continued into a line that extends off of the 2008 and 2010 highs. The line that extends off of the 2005 and 2008 highs is at about 1.0300. Bottom line; here to 1.0300 is resistance for a pullback.
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
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You can follow Paul on Twitter at@PaulRobinonFX.
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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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