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Price & Time: The Unfolding Cycle in the Euro

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This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

Foreign Exchange Price Time at a Glance:

USD/JPY:

PT_euro_unfolding_body_Picture_4.png, Price amp; Time: The Unfolding Cycle in the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/JPY traded to its highest level in over 4 ½ years last week before finding resistance near the 78.6% retracement of the 2008 to 2011 decline in the 103.15 area

Our bias is higher in the pair, but 103.15 is now a natural upside pivot with traction above needed expose the 7th square root progression of the month-to-date low in the 103.85 area

-Near-term focused time cycle analysis indicates the end of the week is a potential turn window

-The 5th square root progression of the month-to-date low 101.85 is immediate support

-However, only aggressive weakness below a convergence of the 38% retracement of the May advance and the 4th square root progression of the May low at 100.95 would turn us negative

Strategy: Like holding long positions in USD/JPY whilst above 100.95.

AUD/USD:

PT_euro_unfolding_body_Picture_3.png, Price amp; Time: The Unfolding Cycle in the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

AUD/USD fell to its lowest level since last June before finding support just ahead of the 88.6% retracement of the June to September advance in the .9700 area

-The 2nd square root progression of last week’s low comes into play around .9910 and while the rate is below this level our bias remains lower in the Aussie

-The .9700 level is now a clear downside pivot, but strong support is seen through to .9645

-Near-term focused time cycles suggest the end of the week is a potential turn window, but more important cycle turn seen in early June

-The .9810 level is resistance, but only strength over .9915 would turn us positive on the Aussie

Strategy: Short AUD positions favored whilst below .9915.

GBP/USD:

PT_euro_unfolding_body_Picture_2.png, Price amp; Time: The Unfolding Cycle in the Euro

Charts Created using Marketscope – Prepared by Kristian Kerr

GBP/USD broke below the 78.6% retracement of the April to May advance to trade to its lowest level in almost two months

Our bias remains to the downside in Cable with focus now on the convergence of the 61.8% retracement of the March to May advance and the 4th square root progression of the May high in the 1.5125/05 area

-This is formidable support and weakness below will be needed to setup a more important decline

-A convergence of the 3rd square root progression and the 1×4 Gann angle line of the May high in the 1.5235 area is immediate resistance

-However, only traction over the 2nd square root progression of the May high at 1.5355 would turn us positive on Cable

Strategy: Continue to like holding Cable short positions whilst below 1.5355.

Focus Chart of the Day: EUR/USD

PT_euro_unfolding_body_Picture_1.png, Price amp; Time: The Unfolding Cycle in the Euro

The cyclical picture in the Euro remains relatively clear following the successive tops recorded during the major turn window at the end of April and the start of May. A broader cycle of USD strength seems to be developing. The shorter-term cycle picture is similar. Since the 1.3240 absolute high seen at the start of the month the move lower has unfolded in an almost “textbook” cyclical manner. If this continues then the rate should see some sort of intermediate-term low around the end of this week before recovering for about a week or so before embarking on the next important leg lower. A more important cyclical low is not seen in the euro until next month. Over 1.3240 undermines the broader picture.

Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

Need guidance managing risk on trades? Download the free Risk Management Indicator.

Analys från DailyFX

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

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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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.

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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

To be added to Christopher’s e-mail distribution list, please fill out this form

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