Analys från DailyFX
Stalking GBPUSD to Trade a Turn; Exotic FX a Stock Market Play
Continue to track developments in the GBPUSD. Given the wild and confusing manner in which Cable trades at turns, it’s impossible to be specific on near term possibilities but continue to stalk this market into month end. Additional detail on GBPUSD is available in today’s DailyFX PLUS Webinar (archived under JamieTrading08162013).
USDJPY resistance is 99.20 and support is 95.35 then the 200 day average / June low. Operate appropriately at these levels. Trade between there is a ‘chop-fest’.
Today’s late break to highs for the month in USDMXN and USDZAR is promising in that we don’t have to worry about early month highs being in place. Risk is tightened to 12.70 USDMXN and 9.78 USDZAR (cost). Sit tight.
GBPUSD
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The GBPUSD blasted through its 200 day average (price closed .73% above its 200 day average…the highest above since January) and yesterday’s outside day and closed the day at the 88.6% retracement of the decline from 6/17. From a Fibonacci perspective, that is the final (although rarely cited) retracement. The level is also marked by the 52 week average and upward sloping line that extends off of the 7/25 and 8/8 highs. The channel is slightly higher, at about 1.5700 on Friday. The rally would consist of 2 equal legs from the July low at 1.5722, which is also the close of the high day in June. If price trades above the June high of 1.5750, then the 61.8% retracement of the Jan-March decline comes in at 1.5788 and the November 2012 low at 1.5826. Parallel channels have worked well in estimating support resistance at multiple degrees of trend in recent years.
FOREX Trading Strategy: Sitting tight…shorting here could work but you may need to feel some pain before it turns (and we don’t KNOW if it will turn anyway!). Given the wild, confusing manner in which Cable trades at turns, it’s impossible to be specific on near term possibilities.
GBPUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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USDJPY
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The USDJPY appears to have completed 5 waves up from last week’s low with Thursday morning’s spike higher on news. The implications from an impulsive rally are for price to find a higher low (above 95.80) before the next bull leg exceeds 98.64. 96.70/90 is estimated support. Exceeding 98.64 opens up the NFP hourly close at 99.20, which is also the close of the high week for July. I’d expect that level to prove difficult to overcome and a strong reaction at that level would warrant bearish consideration against the August 2 high. Big picture supports are 95.35 and the 200 day average / June low.
FOREXTrading Strategy: In summary, resistance is 99.20 and support at 95.35 and then the 200 day average / June low. Operate appropriately at these levels. Trade between there is a ‘chop-fest’.
SP 500
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Solid lines on the chart indicate large volume days (largest volume in 20 days). Dashed lines indicate large volume hours (largest volume in 120 hours). The dotted line is just a prior high. The next chart shows high volume days on the SP future in red with volume days in the 90th – 99th percentile over the last 20 days in magenta. Large volume areas tend to act as support/resistance in the future. When these levels are broken, they can indicate important changes in trend.
The underside of a multi-month trendline held as resistance and the SP 500 rolled over this week. Following Thursday’s selloff, the market has churned around the 5/22 close. Is this the beginning of a bigger turn? It is impossible to know but separation from 1690 (large volume day from 7/31) is a good start.
SP 500 Future (September)
Daily
Chart Prepared by Jamie Saettele, CMT using
USDMXN USDZAR
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREX Trading Strategy: FXTW has followed USDMXN and USDZAR in recent weeks as a way to play a decline is the US equity market. Today’s late break to highs for the month in both rates is promising in that we don’t have to worry about early month highs being in place. Risk is tightened to 12.70 USDMXN and 9.78 USDZAR (cost). Sit tight.
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Interested in automated trading with Mirror Trader?
Commodity Analysis: Gold broke through the July high and has entered a zone of consolidation that took place in mid-June. The consolidation stretches from 1365 to 1395. The top of the zone is defined by a confluence of trendlines and the ‘meridian line’ that we have followed for years. Remember, that line originates from the 2011 (record high) and February 2012 highs. The line then crossed through lows in late August 2012 and the highs in May 2013.
Commodity Trading Strategy: 1395-1420 (June high) is a level where one should expect a response from bears.
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
Subscribe to Jamie Saettele’s distribution list in order to receive actionable FX trading strategy delivered to your inbox.
Jamie is the author of Sentiment in the Forex Market.
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
—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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