Analys från DailyFX

A Long Set-up Rarely Seen in GBP/CAD

Published

10 år ago

28 mars, 2014

DailyFX

Talking Points:

Potential False Break on GBP/CAD Daily Chart
Rare Parallel Channel Consolidation in Play Now
Added Validation for GBP/CAD Longs

GBPCAD is currently demonstrating a rather unusual situation: a sideways range that is relatively even and textbook in nature. In spite of how often texts about technical analysis show this sort of perfectly ranging market, they are, in practice, quite rare.

In fact, even this situation is not perfect, as will be demonstrated later on the four-hour chart. However, the set-up happens to be in the direction of the daily trend, and as a result, it certainly comes as a viable trading opportunity.

As seen on the daily chart below, a rising trend line has been broken recently, and as with all countertrend breakouts, and especially one that has been intact for so long, it is wise to assume that it is false. And, if so, traders may be able to buy GBPCAD at an advantageous price level and capitalize on a resumption of the prevailing uptrend.

Guest Commentary: False Break on GBP/CAD Daily Chart

Even if price only went up to retest the underside of the previous trend line support, there would be more than 150 pips to be had in that move. Needless to say, if price continues higher and the uptrend resumes, the proposition becomes increasingly attractive.

The sideways motion mentioned earlier can be seen to the right on the daily chart above, and one interpretation of that would be a sideways consolidation pattern. However, the four-hour chart below offers a more precise perspective.

This level of magnification shows that the consolidation is actually edging slowly down in a mostly consistent parallel channel. Price is now near support, as estimated from the declining line of support, as well as the double-bottom territory with which GBPCAD is currently flirting. The final support zone has been marked out as 1.8216-1.8295.

Guest Commentary: Parallel Consolidation in GBP/CAD

It is perhaps notable that if this had truly been a sideways consolidation, price would now be in a zone of particular interest to many professional traders. A false breakout to the downside followed by a quick reversal would leave many breakout sellers caught, and if all went according to plan, the panicked liquidation of short positions at that juncture could lead to a swift rise in GBBCAD.

Of course, the market does what the market wants, but this trade has that type of reversal potential nonetheless.

There is also a parallel channel on the hourly chart below, which lends further credence to the idea that support may be imminent. The best triggers for this trade would be bullish engulfing patterns, bullish reversal divergence, and/or pin bars on this hourly time frame.

Guest Commentary: Further Validation for GBP/CAD Longs

This move is currently showing some choppy action as evidenced by the last few candlesticks, but the good news is that most traders would have missed this anyway, and thus, the interaction will begin after price has had a chance to make up its mind. Nonetheless, the usual two or three attempts to get in on a potential bullish move up should be anticipated and prepared for.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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