Analys från DailyFX
Is GBP/USD Carving a 2017 Top?
Though GBP/USD has recovered some of last week’s losses, the pair continues to trade from the back of its foot. We have been anticipating a turn lower at a larger time frame for the past couple weeks because of the Elliott Wave model we are following. We could be on the forefront of larger losses for GBP/USD.
The sentiment picture is more closely aligning with the technical turn as long traders have increased 10% over the past week while short traders have decreased 4% from last week. This has caused the sentiment reading to increase from -1.50 to -1.37 to now. A positive shift towards sentiment is a subtle bearish signal as we use sentiment as a contrarian type of indicate. View the live sentiment reading and learn more about how to trade with sentiment on our IG Client Sentiment page.
We cited previously in “GBP/USD Terminal Wave Matures” that some wave relationships near 1.3060 suggested a reaction lower might occur. Based on the longer term Elliott Wave triangle pattern, this could be the start of a new trend lower that possibly retests 1.19.
Zooming out on the chart to inspect the longer term pattern, we see GBP/USD correcting higher from the October 2016 low in a three wave move labeled A-B-C. The ‘B’ wave appears to have carved a triangle that ended on April 9. We can count a ‘C’ wave higher that appears to be finished.
Three wave moves like this are typical of corrections and suggest a higher probability potential for a complete retracement. In this case, a retracement back towards 1.19. The next important test for GBP/USD will be the 200 day simple moving average, which also appears near a former resistance trend line. This level resides near 1.2596.
If prices move higher above 1.3060, additional topside levels that may create a reaction include 1.3200-1.3235 and then 1.34.
Interested in learning more about Elliott Wave Theory? Grab the beginner and advanced Elliott Wave guide.
—Written by Jeremy Wagner, CEWA-M
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USD/CAD Elliott Wave picture implies continued weakness over time.
The Elliott Wave model for crude oil prices points sideways to higher levels.
USDJPY’s Elliott Wave model shows it is vulnerable to a 110.60 retest.
EUR/USD has been ripping lately. Read more on the EURUSD Elliott Wave picture.
Read the recent Dow Jones Elliott Wave article.
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
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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