Analys från DailyFX
An Intraday Spike Opportunity in AUD/CAD
Talking Points:
- Large Triangle Pattern on Daily Chart
- Long Set-up on Shorter-Term Time Frames
- The Ideal Time Frame for Buying AUD/CAD
AUDCAD is beginning a large triangle-type consolidation on the daily chart (see below). This comes after a downtrend, so the bigger picture is biased to the down side. However, given the unusually large size of the triangle, it is valid to take both longs and shorts within the context of this consolidation.
Guest Commentary: Large Triangle Pattern in AUD/CAD
As price has recently made a high, it is reasonable to imagine that shorts are most favorable now, and in the bigger picture, they probably are. However, the recent move up has been quite abrupt, and thus, there is a possibility that there may be another spike to the upside. Although this is a lower-probability set-up, it is worth trying on the lower time frames in the event that an entry with tight risk is available.
On the four-hour chart below, price has just pulled back to the trend line, which may provide a long-entry opportunity.
Guest Commentary: AUD/CAD Testing Trend Line Support
Since there is no other nearby support or resistance on which to build this trade, we must consult the hourly time frame for further clarification, and there (see below), we have further validation in the form a descending parallel channel that is currently meeting rising support. Together, these levels define a key zone of support that is just 34 pips wide: 0.9719-0.9753.
Guest Commentary: Key Zone for Initiating AUD/CAD Longs
The recent shallowness of the channel helps make a case for initiating this trade on the 15-minute chart (not shown). On that time frame, traders would be advised to look for bullish pin bars, bullish engulfing patterns, and/or bullish reversal divergence.
As always, two or three tries may be needed to get in on the trade. If it works, however, this limited risk will meet with a potential reward of 130 pips or more, which, of course, is dependent upon trade management and stringent risk control.
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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