Analys från DailyFX
Price & Time: Do or Die Time for the Greenback
This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.
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Foreign Exchange Price Time at a Glance:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD failed last week during a cyclical turn window near the 61.8% retracement of the year-to-date range in the 1.3340 area
- However, while above the 2nd square root progression of last month’s high at 1.3110 our near-term trend bias has to remain higher in the exchange rate
- Traction over 1.3340 is needed to alleviate concerns that a cyclical peak is in place and trigger a more important move higher
- Short-term cycle studies are negative over the next couple of days
- The 2nd square root progression of the June high near 1.3185 is immediate support, but only under 1.3115 turns us negative on the rate
Strategy: Took profit on our euro longs. Like the short side if 1.3115 gives.
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD rebounded aggressively last week from just below the 50% retracement of the July range in the 1.5125 area
- However, while below last month’s 1.5435 cyclical high our trend bias will remain negative in Cable
- The 4th square root progression of the 2Q13 high near 1.5250 is a near-term downside pivot, but weakness below 1.5125 is really needed to force a more important move lower
- Short cycles are bit muddled here, but a minor turn window is seen over the next day or so
- Strength over 1.5435 will turn us positive on the Pound
Strategy: Continue to like the short side while below 1.5435.
Charts Created using Marketscope – Prepared by Kristian Kerr
- NZD/USD has come under steady downside pressure since failing last month at the 50% retreacement of the late 2011 range in the .8100 area
- Weakness below .7860 has shifted our trend bias to negative in the Kiwi
- A convergence of Fibonacci and Gann levels in the .7650 area is now key support and weakness below is needed to trigger the next important decline
- Tuesday and the end of the week look like minor turn cycle turn windows in the rate
- The polarity principle suggests the .7860 area is now key resistance and strength back through this level is needed alter the negative structure and turn us positive on the Bird
Strategy: Like selling Kiwi on strength over the next few days.
Focus Chart of the Day: FXCM DOLLAR INDEX
The next couple of days look important for the FXCM Dollar Index. We have been looking for a resumption of the broader USD uptrend and the move last week through key resistance at 10,800 seemingly confirmed this notion. If our interpretation of the cyclical picture is correct then the index should form another higher low over the next day or two and move higher again into the end of the week. Traction over the 61.8% retracement of the July range at 10,890 during this time will be further proof that a new leg higher is indeed underway. The 10,800 area is now immediate support, but only weakness below 10,700 would signal that our broader positive cyclical bias is wrong and a more ominous USD decline is in the making.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the Euro in real time? Try the Speculative Sentiment Index.
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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.
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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