Analys från DailyFX
GBP/USD Short Term View Ahead of BOE, US Retail Sales
Talking Points:
– 1.3100 a major potential support ahead of the BOE, US Retail Sales
– BOE rate decision and US Retail Sales are ahead for what could prove to be a volatile day for the pair
– Market focus might be on hints for further BOE easing
The GBP/USD is trading around the 1.32 handle in early European trading hours as the market awaits the major scheduled event risk on the docket.
The BOE rate decision and US Advance Retail Sales are in focus for the pair today for potential shifts in monetary policy bets.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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The BOE Rate Decision is set to hit the wires 11:00 GMT.
The Bank of England is expected to keep policy at status que, and seems likely to remain on hold for now until economic indicators point to deterioration in the UK after the Brexit vote.
The commentary in the press release might weigh on the pound if the bank emphasizes the likely need to cut rates and ease policy further.
In this context, it will be interesting to see if and how the bank reacts to the (mostly) better than expected UK data since the Brexit vote.
If the MPC reiterates their cautious outlook for the economy, this may still weigh on the Pound. The votes by the MPC members may be interesting to watch as well for signs of diverging views within the committee.
US Advance Retail Sales is also on tap and one of the few significant economic indicators we have before the FOMC rate decision September 21. Sales are expected to have edged down by 0.1% versus the prior flat reading.
The market might need to see a huge beat to push forward Fed rate hike bets in order for September to really come back as a possibility for a hike, as probabiltiy stands at 15% at the moment (according to Fed fund futures).
Inflationary pressures seem to be the missing link for the Fed’s dual mandate, and a good report here could prove influential. With that said, US economic data has been underperforming for a while compared to expectations.
GBP/USD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The British Pound is seeing an uptick in 1-week and implied volatility measures as we head into next week’s decisions, but realized volatility is still subdued based on 20-day ATR readings.
In turn, this may imply that the more “macro” levels could hold until next week, but caution is warranted trading the shorter time frames for breakout type plays.
GBP/USD 30-Min Chart (With the GSI Indicator): September 15, 2016
(Click to Enlarge)
The GBP/USD is trading above potential support at 1.3200, with GSI calculating higher percentages of past movement to the upside in the short term.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here, and download the Trade Station version here.
Other support levels to watch in the short term might be the area above 1.3150, 1.3120, 1.3050 and 1.3000.
Levels of resistance seem clean at 1.3250, 1.3300, 1.3350 and 1.3400.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
We studied over 43 million real trades and found that traders who successfully define risk were three times more likely to turn a profit.
Read more on the “Traits of Successful Traders” research.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 54.1% of FXCM’s traders are long the GBP/USD at the time of writing, offering a slight short bias on a contrarian basis.
You can find more info about the DailyFX SSI indicator here
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
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
To be added to Christopher’s e-mail distribution list, please fill out this form
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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