Analys från DailyFX
Price & Time: FOMC the Next Macro Trigger?
Talking Points
- Euro reverses from Fibonacci zone
- Aussie decline gathers pace
- SPX entering into cycle turn window
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Focus Chart of the Day: SP 500
Another day and another new all-time high in the SP 500 yesterday. While no major cycle turn windows are seen for a while in the index we feel some caution is warranted over the next few days as a medium-term cycle turn window is slated for the second half of the week. At the same time sentiment as measured by the Daily Sentiment Index (DSI) is closing in on 90% bulls – a level that has coincided with tops in the past. We will be paying close attention to a Gann/Fibonacci confluence between 1770/90 as this area marks a potential near-term stopping point for the SPX. The 1730 level is important support, but only unexpected aggressive weakness below 1708 would signal a deeper decline is unfolding in the stock market.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD has come under modest downside pressure following last week’s failure at the 61.8% retracement of the 2011 to 2012 decline in the 1.3830 area
- Our near-term trend bias remains positive on the exchange rate while above the 9th square root progression of the year’s low in the 1.3655 area
- Resistance between 1.3830 and 1.3890 is a major overhang and needs to be overcome on a daily closing basis to set up a more important move higher
- The end of the week is a minor cycle turn window
- A daily close below 1.3655 would turn us negative on the Euro
EUR/USD Strategy: Like holding only a reduced long position while above 1.3655.
Price Time Analysis: AUD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- AUD/USD has come under further downside pressure following last week reversal during a medium-term cycle turn window
- Our near-term trend bias is lower in the Aussie while below the 1st square root progression of the month-to-date high in the .9660 area
- The 61.8% retracement of the October range near .9460 is the next clear attraction/reaction level
- A minor cycle turn window is seen over the next day or so
- Only a close over .9660 would signal and early resumption of the broader uptrend in AUD/USD
AUD/USD Strategy: Like the short side while below .9660.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD traded to its highest level in over a month and a half last week before encountering resistance just above the 61.8% retracement of the July to September decline near 1.0450
- Our near-term trend bias is higher in Funds while above the 50% retracement of the August to September decline near 1.0370
- Traction over 1.0450 is needed to expose the next Gann attraction at 1.0485
- A minor cycle turn window is seen over the next day or so
- Weakness back under 1.0370 would shift the trend bias negative
USD/CAD Strategy: Like the long side while over 1.0370.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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
Looking for a way to pinpoint sentiment extremes 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
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
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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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