Analys från DailyFX
Will AUD/USD Be a Late Bloomer to the USD Correction?
If you prefer a quiet nap during cloudy afternoons, then AUD/USD is a market to consider. While many of the markets are increasing in volatility, AUD/USD continues to chop around sideways in a range. US Dollar has been weakening over the past few days and AUD/USD appears aloof.
Though it may be difficult to imagine right now, the Elliott Wave model suggests the next big move for AUD/USD may be to the upside. It appears AUDUSD may be in a (b) wave or ‘x’ wave consolidation. In both instances, those patterns suggest another move to the upside over the coming weeks to retest 78 cents.
Model 1 – (b) wave consolidation
The left side of the chart above depicts a (b) wave correction that may continue to drift lower and retest 73 cents and may even break down slightly to 71 cents. Under this pattern, support appears as the (b) wave ends and prices would push higher to retest 78 cents.
Model 2 – ‘x’ wave triangle
The right side of the chart above illustrates a possible ‘x’ wave triangle. Elliott Wave triangles are five wave patterns that chop sideways. It appears we may have finished the last wave or may finish it with another dip that holds above .7160.
Under this model, prices may reverse soon to the upside to begin their retest of .78. A break of the red trend line is symptomatic that the downward momentum is slowing and the mood of the market may be changing towards higher prices.
IG Client Sentiment is neutral at +1.26. This should not be too much of a surprise as prices have been in a larger corrective pattern since September 2015. If this sentiment reading begins to drop, then that would signal a shift that lines up with the overall Elliott Wave picture. Learn how to trade with sentiment with our IG client sentiment guide.
Three DailyFX analysts selected the Australian Dollar as their top trade for 2017. Read pages 13, 18, 20 of DailyFX’s Top Trades of 2017.
—Written by Jeremy Wagner, CEWA-M
Discuss this market with Jeremy in Monday’s US Opening Bell webinar.
Follow on twitter @JWagnerFXTrader .
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Read the recent Gold Elliott Wave article calling for $1260.
USD/JPY followed its largest down day since July 2016 with an anticipated bounce up towards 111.84. This pattern now looks to be at risk of a retest of this week’s lows.
Read the recent Dow Jones article and how Wednesday’s largest sell off since September could be part of a larger triangle pattern.
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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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