Analys från DailyFX
A Textbook Buying Opportunity in EUR/CAD
Talking Points:
- Prolonged Weekly Uptrend in EUR/CAD
- Consolidation Before a New Push Higher
- Key Support Zone for Buying EUR/CAD
This week is starting out with a potential opportunity to hop onto the uptrend in EURCAD, which has been going on for a quite a long time.
Of course, the question always exists as to whether or not a trend is coming to an end, but ultimately, no one can be absolutely certain until it has happened. As a result, continuing to buy dips in an uptrend is the most prudent move.
Guest Commentary: Accelerating Weekly Uptrend in EUR/CAD
The daily chart below is exhibiting a set-up that not all traders would consider taking, but it constitutes what might be a slight hesitation before an upward move. Of course, this could just as easily be the beginning of a deeper pullback, which is why lower time frames are used in order to obtain a more precise entry and counteract this risk.
Guest Commentary: Key Decision Point for EUR/CAD
As this is a mere hesitation, it is not surprising that there are no rising lines of support on the below four-hour chart. However, there is plenty of evidence that price may be approaching a zone of support. Previous horizontal turning points indicate rigorous interaction between bulls and bears in the blue shaded zone. Ideally, price should bounce off this level to continue its upward journey.
Guest Commentary: Key Support Zone for Buying EUR/CAD
The key support zone has been identified as 1.5150-1.5196. This zone is a mere 46 pips in depth, as compared with the potential for a move of 140 pips or more just to retest the recent high. Thus, the risk profile is adequate, but the hourly chart (not shown) should be used as the trigger time frame for this trade.
On the hourly time frame, acceptable triggers would consist of bullish reversal divergence, bullish engulfing patterns, and/or pin bars.
Two or three tries may be needed to get onto this move, however, it is also worth noting that price may completely disregard support and form a deeper pullback, heading back towards the rising line of support instead. In that case, it is necessary to limit losses as much as possible, so no more than three tries should be made, as there will always be another support zone to consider.
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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