Analys från DailyFX
Silver Prices: Triangle Morphs into Larger Version of Itself, Wait for the Break
What’s inside:
- Silver prices fake-out breakout from triangle formation leads to…
- A broader pattern
- Waiting for another confirmed break above or below the top or bottom-side of pattern
The title of yesterday’s commentary was, “Silver: Price Action Contraction Points to Explosive Move, Again”. And while the chart has been altered a bit since then, we still stand by the notion we will see a strong move soon as the symmetrical triangle we examined has enlarged, but still maintains its integrity as a ‘good looking’ pattern.
The development and eventual break of triangles can be tricky at times – silver currently an excellent example of the difficulties these patterns can present. The configuration we had chalked up had a fake-break to the upside into 19.20 resistance, resulting in no reason to execute (closing 1-hr reversal bar back inside of pattern), but the subsequent break lower did (closing 1-hour bar outside of pattern). The caveat was the break occurred into a trend-line extending back to the 8/28 low. Silver found support at this trend-line and bounced back up into the previously drawn triangle, but not all was lost. It kept alive an even broader pattern.
And so it is today, silver is quickly approaching the apex of the broadened triangle. The lower trend-line which makes up the pattern also consists of that trend-line which held as support yesterday; this makes for a less likely chance of seeing another fake-out breakout should we see resolution to the downside. Key word is should. It could at this juncture end up breaking out to the upside as it did back at the begining of the month. So, as per usual, we will wait for another confirmed break of the pattern before taking action.
The measured move is still the same as it was yesterday as the height of the pattern has not changed, roughly 55 cents above or below the top or bottom-side trend-line. A breakdown would bring the 8/28 low at 18.37 into the discussion. A break to the upside will again quickly find silver up against that 19.20 level, so it will make momentum perhaps a bit more sluggish until it can hurdle that important level towards a measured move target in the 19.50s.
Hope is not a good strategy, but here’s to hoping anyways that we see a clean break one way or another.
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinonFX.
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Emails can be directed to probinson@fxcm.com with questions or comments.
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.
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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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