Analys från DailyFX
Price & Time: Euro Testing Key Resistance Zone
Talking Points
- USD/JPY rebounds off key Gann level
- USD/CAD has important cycle turn window later this week
- Euro testing key resistance zone
Unfamiliar with Gann Square Root Relationships? Learn more about them here.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY found support today at the 4th square root relationship of the year-to-date high near 101.35
- Our near-term trend bias is positive in the exchange rate while 101.35 holds
- The 2nd square root relationship of the year’s low at 102.75 remains important resistance that needs to be breached soon if a more important move higher is to take hold
- A cycle turn window is seen around the middle of the week
- A daily close below 101.35 would turn us negative again on USD/JPY
USD/JPY Strategy: Like being square for the time being, but may look to buy a break of 102.75.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has come under steady pressure over the past few weeks since failing just below the 50% retracement of the 2009/2011 decline at 1.1235
- Our near-term trend bias is lower in Funds while below 1.1120
- Interim support is seen at 1.0950 ahead of then next major downside attraction at 1.0905
- An important cycle turn window is seen at the end of this week/early next week
- A daily close over the 1st square root relationship of the year’s high at 1.1120 would turn us positive on USD/CAD
USD/CAD Strategy: Shorts favored while below 1.1120, but the clock looks to be ticking for the decline.
Focus Chart of the Day: EUR/USD
The price action around bank holidays in the US or the UK is usually written off by FX analysts as inconsequential due to the “lack of volume” associated with these events. We have never really subscribed to this thinking as PL will reflect moves (and the subsequent psychological knock on effects) the same whether there was high turnover or not. Our interest actually tends to perk up around these periods as we have noticed countless episodes over the years where bank holidays actually produced meaningful reversals if not full on changes in trend. Heading into today’s President’s Day holiday in the US our attention is on EUR/USD and USD/CHF as both are at points in their respective cycles where a change in direction looks quite possible. They are also both nearing key levels of resistance and support at 1.3735 and .8875. If at least a short-term turn is to materialize then we would expect it to do so over the next day or so from around these key levels. Continued European currency strength into late in the day on Tuesday would signal our cyclical view was off.
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— 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
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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