Analys från DailyFX

4 GBP/AUD Signals That Favor the Downside

Published

11 år ago

17 april, 2014

DailyFX

Talking Points:

Potential Re-test of Broken Trend Line
2 Concurrent Signals on the 4-Hour Chart
Rising Wedge Pattern in Play for GBP/AUD

It is rare for a double-top pattern to represent a potential entry point in forex—or in other markets, for that matter—as prices often overshoot the estimated turnaround area. Today’s trade is no exception to that general rule, although this is as close to a double top as we’re likely to see in such choppy markets.

The story begins on the daily chart of GBPAUD, which is showing somewhat bearish momentum. A trend line was recently broken, but it has yet to be retested. That is a prime opportunity to look for a potential short set-up in order to hop on should the trend line break prove false and the move continue to the down side. Nonetheless, even a return to test the top of the broken trend line would quite easily produce a move in excess of 200 pips.

Guest Commentary: Daily Trend Line Break in GBP/AUD

As seen on the below four-hour chart, price has already hesitated once at a previous overhead resistance cluster, as marked. The pin bar that resulted on the four-hour chart did not result in a downward move, but it was sufficient evidence to support the continued presence of sellers in the area of the shaded blue box. Should price reverse from its current location, a double top (or as close to one as can be reasonably expected in forex) would be formed.

It is also worth noting that this short trade is actually in the direction of the daily trend, and not against it.

Guest Commentary: Key Resistance Zone for Selling GBP/AUD

The estimated resistance zone is 1.7976-1.8061, an area that is 85 pips in depth and ultimately insufficient from a risk standpoint to justify taking this trade. As a result, a lower time frame will have to be employed in order to improve the ratio and find a viable trade trigger.

Things look rosier on the hourly chart below, where a wedge-type pattern has formed. Price is now creeping steadily along the lower boundary of the wedge, which is a sign of decreased momentum. It may well simply break down here, although it is equally possible that a retest of the highs or even a temporary spike past the top of the wedge may occur.

Guest Commentary: Rising Wedge on GBP/AUD Hourly Chart

In all, the safest response is to hold off until at least a new high has been made, allowing for the potential occurrence of bearish reversal divergence in the process. Should such divergence not appear, pin bars and/or bearish engulfing candlestick patterns would also indicate viable short-entry opportunities, particularly if price made a last-minute momentum move.

The hourly time frame should provide a risk zone most likely in the 35- to 50-pip range, which is small enough to justify taking this trade. Nonetheless, two or three attempts may be required to successfully hop on to this move. One last item firmly in this trade’s favor, however, is the fact that the four-hour chart is currently displaying six consecutive bullish bars, and reversion to the mean theory suggests that GBPAUD is now overdue for some bearish movement.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

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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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

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