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US Dollar Chart Setup Favors Weakness, S&P 500 Breaks Support

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THE TAKEAWAY: US Dollar technical positioning hints prices are vulnerable to deeper losses. Meanwhile, the SP 500 has edged past the first layer of key chart support.

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US DOLLAR TECHNICAL ANALYSIS Prices moved lower as expected, with prices taking out rising channel support after completing a Bearish Engulfing candlestick pattern. Sellers now aim to challenge the 38.2% Fibonacci retracement level at 10694, with a move beneath that exposing the 50% Fib at 10638. Channel support-turned-resistance is now at 10804.

Forex_US_Dollar_Chart_Setup_Favors_Weakness_SP_500_Breaks_Support_body_Picture_5.png, US Dollar Chart Setup Favors Weakness, Samp;P 500 Breaks Support

Daily Chart – Created Using FXCM Marketscope 2.0

SP 500 TECHNICAL ANALYSIS – Prices broke support at 1637.00, the 14.6% Fibonacci retracement, exposing the 23.6% Fib at 1605.90. A further push below that eyes the 38.2% Fib at 1555.50. Near-term resistance is at the May 22 high (1687.40), a barrier reinforced by the underside of a broken rising trend line set from mid-April (now at 1682.00).

Forex_US_Dollar_Chart_Setup_Favors_Weakness_SP_500_Breaks_Support_body_Picture_6.png, US Dollar Chart Setup Favors Weakness, Samp;P 500 Breaks Support

Daily Chart – Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices put in a Bearish Engulfing candlestick pattern, hinting a turn lower may be ahead. Near-term support is at 1386.51, the 23.6% Fibonacci retracement. A break below that targets the 38.2% level at 1364.62. Initial resistance is at 1421.90, the May 31 swing high.

Forex_US_Dollar_Chart_Setup_Favors_Weakness_SP_500_Breaks_Support_body_Picture_7.png, US Dollar Chart Setup Favors Weakness, Samp;P 500 Breaks Support

Daily Chart – Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS Prices appear to have completed a Head and Shoulders top chart formation. Sellers initially eye the May 1 low at 90.09 from here, but the HS setup implies a measured downside objective at 88.58. Neckline support-turned-resistance is now at 92.71, with a move back above that eyeing the May 28 highat 95.89.

Forex_US_Dollar_Chart_Setup_Favors_Weakness_SP_500_Breaks_Support_body_Picture_8.png, US Dollar Chart Setup Favors Weakness, Samp;P 500 Breaks Support

Daily Chart – Created Using FXCM Marketscope 2.0

Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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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

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinonFX.

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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

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