Analys från DailyFX
Gold Prices Pose a Bullish Run, but Set a Lower-High
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Talking Points:
- Gold Technical Strategy: Longer-term up-trend another bump higher after Friday’s NFP, Tuesday’s ISM.
- As U.S. rate hike bets shuttered lower after disappointing data, Gold prices caught an aggressive bid-higher.
- If you’re looking for trading ideas, check out our Trading Guides. And if you want something more short-term in nature, check out our SSI indicator.
In our last article, we looked at Gold prices trending lower after the chorus of Fed speakers had helped to prod U.S. rate expectations higher around the Jackson Hole Economic Symposium. So while the bullish structure and outlook were still very much alive for Gold, the risk of a deeper retracement made the prospect of bullish positions rather daunting; especially given the concerted effort from various members of the Fed to help ramp those rate-hike expectations higher.
But as we saw on June 3rd and again on July 29th, those expectations for hakwish moves from the Federal Reserve can quickly be offset by disappointing U.S. data that could, potentially, mean that markets are waiting even longer for that next rate hike from the Fed. This is generally negative for the US dollar as rate-hike bets go out of the window; and, in-turn, a positive for Gold.
This has been somewhat of the context of Gold prices this year: The bullish top-side moves have been fast and violent as U.S. rate hike expectations go out-of-the-window; followed by grind that could last for months as markets await more information on what may elicit that next move from the Fed. This can be a dangerous type of environment to trade in and, in-turn, traders should adapt by becoming more prudent and even more aggressive with risk management.
The complication with current price action is the fact that prices are sitting so near prior levels of resistance that have also happened to come-in at lower-highs. The July high was set at $1,375.04, and in early August, Gold prices tried to break above but faced four days of selling that capped the top-side run. Another attempt to eclipse that batch of resistance later in the month fell flat. This most recent top-side run has seen sellers come-in eveen ahead of those lows, so while the past four days have been extremely bullish in Gold, this batch of resistance for the next $30 above price action could make bullish continuation a distant propsect with current structure.
To confirm the prospect of continued bullishness, traders would want to see price action finally able to eclipse these prior highs starting with the swing-high at $1,357, followed by the August highs at around $1,367.
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
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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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