Analys från DailyFX
A GBP/NZD Set-up That’s Happening as We Speak
Talking Points:
- Classic ”Buy the Dip” Set-up
- End of a 5-Wave Elliott Pattern for GBP/NZD
- A Viable Entry Opportunity Happening Right Now
The AUDCHF trade we highlighted yesterday worked out very quickly, and now today, we’ll look for a similar result from a GBPNZD set-up, although this trade goes in the opposite direction as the AUDCHF one did.
The daily chart is very straightforward, as price is in an uptrend and is pulling back towards support for a possible bounce.
Guest Commentary: Pullback in GBP/NZD Uptrend
On the four-hour chart below, we see a potential completion of an Elliott wave pattern. The five waves up are clearly marked, and the pullback has been two-legged, with the support zone marking potential end points for the c wave.
Guest Commentary: End of a 5-Wave Elliott Cycle for GBP/NZD
In this case, a reasonable support area has been derived from previous resistance levels visible on the four-hour chart. Together, the final support zone is 1.9742-1.9866.
As traders will note, price has already begun to flirt with the support area and may be prepping for a move already.
The trigger would be a bullish pin bar, a bullish engulfing pattern, or a bullish reversal divergence on the hourly chart (see below). At the time of writing, the first bullish pin has already formed, as shown.
Guest Commentary: GBP/NZD Entry Opportunity Happening Now
The first entry would have been near the 1.9905 level, and those who are able to hop on at this level on a price pullback can probably still get on this move. If not, the other option would be to wait and see if price pulls back to the support zone for another swipe before heading upwards.
This is trend trade, so the set-up should be traded at full (but controlled) risk. Those who are unable to get in on the first entry should take solace in the fact that many of these trades do give a second entry opportunity. Of course, what happens next is entirely in the market’s hands.
By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com
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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