Analys från DailyFX
USD/CHF Technical Analysis: Parity Still In Play
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Talking Points:
- USD/CHF Technical Strategy: intermediate-term mixed, short-term bullish.
- We looked at RSI divergence in our last article to highlight that the bearish move may be getting a bit stale, and since then bulls have returned to push prices-higher.
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In our last article, we looked at the return of bullish price action in Swissy with eyes on the level of parity (1.0000) for support. And recent price action in USD/CHF has very much moved-along with general Dollar trends, in which the Greenback posed a near-historic run in the final two months of last year to lead-in to an extended bout of retracement in January.
But as we came into February, that move-lower in USD/CHF was looking a bit overdone, as we had remarked on the RSI divergence that had already begun to show. And while the first two weeks of February saw the return of bullish price action in the Dollar, the week since has been considerably less-directional as the Greenback has continually been rebuked at resistance.
But of particular note is that while the U.S. Dollar failed to punch-up to a new-high this week, USD/CHF was able to do so, albeit barely, before sellers returned. This would indicate an additional inclusion of Franc-weakness, and this could be encouraging for those looking to time long positions in the effort of getting on the side of the ‘bigger picture’ trend in USD/CHF.
For those looking to accumulate bullish exposure in USD/CHF, waiting for ‘higher-low’ support would likely be the most attractive way of moving-forward in the near-term. On the chart below, we look at three potential zones of support for bulls to track in the effort of catching that next higher-low support. The first zone, or ‘S1’ runs around 1.0033-1.0041, and this includes the 38.2% retracements from both major moves of the post-Election run as well as the January retracement. A bit deeper, the ‘S2’ level is set around parity, which is confluent with the 50% level of the January retracement. And from .9947-.9966 we have another confluent zone that includes the 50% retracement of the post-Election move.
Chart 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.
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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
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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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