Analys från DailyFX
Gold Prices Stage Another Bearish Break: Watch $1,250
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- Gold Technical Strategy: Intermediate-term mixed, short-term bearish.
- Gold prices opened the week by breaking below support at $1,261. FOMC is on deck for Wednesday, and of recent, Gold prices have rallied aggressively after rate hikes in December and March.
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In our last article, we looked at bearish continuation in Gold prices. After running above the $1,295-level in the middle of April as the post-March rate hike rally extended further, Gold prices have begun to reverse and have continued to head-lower as we march towards another FOMC rate decision on Wednesday of this week. This is relevant because over the past six months, the two rate hikes offered from the Federal Reserve have appeared to function like kerosene on a scalding hot market, further driving the bullish move in the wake of the Fed’s policy tightening.
On Wednesday of this week we get the Federal Reserve rate decision for the month of May. There is scant expectation for any moves here, and likely, the driver will come from the details in the statement and just how confident the Fed might be for future rate decisions; with emphasis likely moving towards the bank’s June meeting. There’s no press conference scheduled for Wednesday’s meeting, so the details will likely be treated with a heavy dose of inference from market participants, and this can carry a strong bearing on Gold prices.
As of this writing, Gold prices are in the midst of yet another support break; falling below the $1,261 level that we looked at last week as our ‘s3’ zone of support. We’ve also seen a trend-line break with near-term resistance showing-up around prior support.
Chart prepared by James Stanley
For those looking to execute bearish strategies in Gold, they’d likely want to wait for a re-test of the $1,261 area as some element of resistance before initiating short positions. The zone around $1,250 is a confluent area of support, and this could denominate the necessity of patience on the current setup. We had identified this as our ‘s4’ level of support in our last article, and if this does, in-fact, become broken, the prospect of a longer-term bearish move will look considerably more attractive. But until then, traders will likely want to look at profit targets inside of that support level, which could make a one-to-one risk-reward ratio impossible if using the prior swing-high at $1,268.
Chart prepared by James Stanley
If a re-test of $1,261 is not in the cards, bearish strategies could be re-directed towards the $1,250 zone by allowing price action to break-below, at which point $1,250 can be re-assigned as ‘lower-high’ resistance in the effort of trading the continuation move-lower with a risk-centric approach.
— Written by James Stanley, Strategist 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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