Analys från DailyFX
An 18 Year Line in NZDUSD is Back in Play
- EURUSD 1.3642 and 1.3820/60 are ‘tradable’
- AUDUSD reaction levels are slightly higher
- USDCAD breakout fails; but 1.0985 is support
–Friday’s DailyFX Plus webinar (video is titled Jamie’s Trading Webinar 03-28-2014).
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Weekly
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-EURUSD failure to hold above the line that extends off of the 2008 and 2011 highs is well documented. As mentioned the last several weeks, “the development could mark an important change in conditions. A reaction area rests at the February 2013 high of 1.3710 and a break below 1.3642 would make a stronger case for a larger topping process.”
-On Friday, EURUSD responded to the 3/5 low. Whilst a larger top appears be brewing, respect bounce potential from 1.3642. 1.3813/30 is estimated resistance.
Weekly
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-A weekly key reversal the week that ended 2/21 and a doji the week that ended 3/7 are warnings of a top. The rate bounced from the line that extends off of the November and February lows, keeping near term upside pressure intact.
-Given extreme COT readings, don’t forget about the reversal characteristics seen at the February top. One can’t dismiss the trendline hold this week either. Tis a battle between bullish and bearish interests and selling is eyed near 1.6665 and 1.6711 with support at 1.6567 and 1.6495.
Weekly
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-AUDUSD broke out this week. The head and shoulders measured target is .9500/11 but there a good deal of levels before then that could inspire a reaction. The levels in question are .9320s (see June-July levels) and .9386-.9405 (2009 high / 2011 low).
-.9150/90 is estimated support.
Weekly
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-NZDUSD ends March on a high note. The rate tagged the 2013 high this week and is pressing against the line that extends off of the 1996 and 2007 highs. That line crosses through the 2008, 2011, and 2014 highs as well. In 2011 (record free float high), the rate surged through the line in late July before topping on August 1st. Does something similar happen here? The channel that defines the advance from the 2011 low is just above the record high in April.
Weekly
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-USDJPY tested the underside of the trendline that connects the lows from November 2012 and October 2013 3 weeks ago. The top was also in line with the May 2013 high.
-Since February 1, USDJPY has spent most of its time between 101.50 and 102.75. Prognostications regarding which way the market will break are silly but I will note key levels within the multi month range at 103.25 and 102.17/32.
-Longer term, the trend is up but 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. That seems drastic
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. Watch for support at 1.0985 next week. Failure to hold 1.0909 would delay the bull and open up 1.0736 (December high).
Weekly
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-USDCHF (and EURUSD for that matter) traded through their early March highs on Friday. The monthly ranges are small but the events qualify as ‘intra-month reversals’ nonetheless (month closes Monday). Some reversals come with a bang and some come with a whimper. Exceeding the line that extends off of the July and January highs would brighten the longer term bull case.
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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