Analys från DailyFX
EURUSD Could Top Above 1.3800
- EURUSD trades around important level
- GBPUSD key reversal
- NZDUSD outside week
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Weekly
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-EURUSD remains capped by the trendline that connects the 2008 and 2011 highs (exceeding that level could trigger a breakout-first resistance would be 1.4250-1.4310). The underside of the line that extends off of the September and November lows is being tested as resistance now.
-The rally from the February low consists of 2 equal legs (2 equal legs would be exact at 1.3768…high right now is 1.3772). Right now, the market is trading around the important 1.3744 level. 1.3744 is the 12/27 close (high so far for the move). Former highs at 1.3811 to 1.3831 and the line that extends off of the 2008, 2011 and December highs remain of interest as a reversal zone if reached. Below 1.3636 would suggest the market has topped.
-The late December failure does raise the possibility of a double top with the October and December highs. The pattern would trigger below 1.3294 and yield a 1.2757 objective. This level is in in line with the 2013 low.
Weekly
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-GBPUSD found support 2 weeks ago from former resistance levels; specifically the October high and top side of the line that extends off of the 2009 and 2011 highs. The rally from the level signals a significant breakout. That doesn’t mean that the breakout can’t fail of course.
-GBPUSD traded to the highest level since November 2009 but did form a weekly key reversal. The development could be the earliest warning that the breakout will fail.
Weekly
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-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067.
-The largest advance since the October top is underway. The advance is impulsive (5 waves). The implications are for a pullback into .8820/30 before another rally attempt towards .9166-.9267. The trendline that extends off of the April and October highs crosses .9166 in mid-March.
Weekly
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-NZDUSD reversed from a trendline confluence defined by the line that extends off of the October and January highs as well as the underside of the line that extends off of the August and November lows.
-The rate formed an outside week (higher high and higher low). Such a reaction can denote an important event (a top in this case). The outside week is also useful as a point of reference.
Weekly
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-USDJPY finishes the week right below the trendline that connects the lows from November 2012 and October 2013 (again). The bearish engulfing pattern seen last week is negated by a bullish engulfing pattern this week. As such, view the February low as important to the near term bull case.
-102.85/93 is a level that may provoke a reaction (pullback). This level is defined by the 1/13 low, 1/30 and 1/31 highs.
-Longer term, there is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.
Weekly
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–Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
-USDCAD has reacted at support.
Weekly
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-The USDCHF may have completed a corrective decline from the 2012 high in late December. The decline is in 3 waves, channels in a corrective manner (connect the origin of waves A and C and project a parallel from the terminus of wave A to project the terminus of wave C), and consists of 2 equal waves (would be exactly equal at .8888…the lowest weekly close was actually .8885).
-The market must stay above the December low in order to maintain a constructive longer term bias. Failure to hold could result in a drop towards .8566. USDCHF needs to overcome .8940 in order to flip the near term picture. .8830 is the last level before the low could produce a low.
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.
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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
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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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