Analys från DailyFX
AUD/USD Trading Around Key Support Ahead of US 3Q GDP
Talking Points:
– AUD/USD trading above key trend line support around 0.7550
– US 3Q GDP numbers headline the economic docket and could prove crucial for near term directional conviction
– Learn good trading habits with the “Traits of successful traders” series
The AUD/USD is trading above key trend line support around 0.7550 after the Aussie failed to find follow-through to carry it above the all-important 0.77 handle resistance.
Looking ahead, US third-quarter GDP numbers headline the economic docket and could prove significant for Fed rate hike speculation.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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US Advanced 3Q GDP figures are set to hit the wires 12:30 GMT. Expectations are for 2.5% growth in 3Q year-on-year, after the prior and disappointing 1.4% figure.
A positive report may add further momentum to the latest US Dollar rally, as it seems the Fed are on course for a potential rate hike in December.
With that said, the probability for a December hike currently sit at around 72% at the time of writing (according to Fed fund futures), implying that risks may be skewed to the downside as a weak GDP report might have more influence inducing a sharp US Dollar correction by hurting hike probabilities, as opposed to a limited response on positive numbers.
On the other side of the equation, RBA rhetoric has been perceived as cautiously positive as of late, leaning away from the dovish side to more of a “wait-and-see” approach, thus lowering probabilities for further tightening after the August rate cut; a fact which may have offered some resilience to the Aussie in the face of recent US Dollar strength.
Taking this into consideration might suggest that a clear AUD/USD breakdown may need another catalyst to present itself, with “risk-off” being a prime candidate if that scenario was to finally materialize.
AUD/USD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The AUD/USD is seeing a pickup in 1-week and 1-month implied volatility measures ahead of next week’s rate decisions.
With that said, 20-Day ATR readings are sitting at subdued levels, potentially implying that major technical levels may hold until a clear catalyst presents itself.
AUD/USD 30-Min Chart: October 28, 2016
(Click to Enlarge)
The AUD/USD is sitting near short term support around 0.7576.
Other support levels to watch might be 0.7550, 0.7525 and 0.7500.
Levels of resistance in the short term appear to be 0.7600, 0.7620, 0.7650, 0.7674 and the 0.77 handle.
In the short term, GSI is showing similar momentum patterns moved to the downside more often than to the upside.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
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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