Analys från DailyFX
USD/CHF Technical Analysis: The Range within the Trend
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Talking Points:
- USD/CHF Technical Strategy: Flat.
- USD/CHF has held higher-low support, but a major Fibonacci level looms just ~40 pips above current price action.
- If you’re looking for trade ideas, check out our Trading Guides; they’re free.
- SSI remains stretched in USD/CHF by a tune of +1.4-to-1. Click here to learn more about SSI.
In our last article, we looked at the building up-trend being seen in USD/CHF after a fresh two-month-high had taken out out the prior swing at .9795. And while much of this move was related to the resurgence in the Greenback that’s been seen since the beginning of May, few pairs have reflected this USD strength as cleanly as the Swissy.
But looming just ~35 pips away we have a major Fibonacci level that’s shown a tendency to support and resist prices in the four-plus years since its formation. This is the level of .9948, and it’s the 38.2% retracement of the ‘secondary move’ in USD/CHF, which takes the 2010 high to the 2011 low. This level had provided the swing high in the year 2012, and didn’t become eclipsed again until early 2015. This is a significant price level on USD/CHF, and given the near-term bias in the pair (up-trend), traders may want to approach such a resistance level with caution, particularly for longer-term strategies.
For those looking to establish longer-term positions, observe price action behavior around this key level. As in, if we can get a clean break above .9948, we have the parity level just a little higher. This could be ample opportunity to look for a ‘lower high’ around this zone of prior resistance should new highs come into play.
Conversely, for traders comfortable playing shorter-term strategies, they can look at playing the shorter-term range that’s developed; looking to buy support or, in essence, looking to apply range-bound logic to a trending pair. This would entail getting long after a support inflection off of the .9887 Fibonacci support level, which is the 61.8% retracement of the prior major move, taking the January 2016 high to the February 2016 low (this retracement is shown in green on the below chart). Key would be stop placement, as a target to .9948 may offer less than 50 pips of possible upside after that support confirms, which would mean a stop of less than 25 pips for those looking to get a minimum 1-2 risk-reward ratio.
Created with Marketscope/Trading Station II; prepared by James Stanley
— Written by James Stanley, Analyst for DailyFX.com
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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
—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
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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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