Analys från DailyFX

Can Gold Prices Rally with Fed Raising Rates? Patterns Think So

Published

8 år ago

29 december, 2016

DailyFX

Talking Points

-Gold prices fell nearly 20% in the last half of 2016

-The triangle in August and September 2016 suggest the downward correction is temporary

-Targets include $1,280 and possibly higher in 2017

Gold prices in 2016 has seen a tale of two halves. During the first half of 2016, gold prices increased nearly 30% to reach a high of $1375. The last jab higher was fueled by the emotion of the Brexit vote in late June when the Fed Fund futures softened their rate hike path.

Then, as traders began to digest what Brexit really means, we saw gold prices sell off nearly 20% from those highs down to $1122 in December. The ugliness of Brexit was to be dealt with off into the future and markets could focus on getting through US elections. We can see the surprise result of Donald Trump winning the White House caused a temporary jump in gold prices.

Peering into 2017, the technical pattern for gold prices appears incomplete to the upside. I know, it seems strange that at a time when the Fed is increasing rates an asset such as gold would outperform the US Dollar. According to the Elliott Wave model, the odds are shifting towards higher prices.

The technical pattern since the highs in July 2016 are taking the shape of a corrective move. The big clue here is the price action in August and September 2016 appears to carve a triangle formation. We know from Elliott Wave Theory that triangles print in corrective waves or in the fourth wave position of an impulse. Since the triangle appears early in the formation, it clearly would not be a fourth wave of a bearish impulse. By the process of deduction, that leaves the whole structure from July 2016 as a corrective structure.

(To learn more about impulses and triangles, read page 3 4 of the Advanced Elliott Wave Guide found here.)

Therefore, if the price action since July is likely corrective, that increases the odds this current down trend is a large ‘X’ wave or ‘B’ wave of a flat. (Page 5 and 6 of the Advanced EW Guide)

That means there is an increased chance that a ‘Y’ wave or ‘C’ wave is coming. Both waves imply similar things and that a move towards $1,280 and possibly higher is elevated.

The low we found in December 2016 at $1,122 may prove to be an important low. Notice how wave (y) is 1.618 x wave (w) = $1,120.

Additionally, the 78.6% retracement level of the December 2015 to July 2016 high is near $1,117. As a result, we have several longer-term wave relationship coming into play near December’s $1,122 low.

If gold prices are successful on moving higher, they may find some static near $1185-$1205. A successful move above this zone begins to elevate the bullish outlook more.

What does that say for the Fed? Well, that is another discussion for another day, but it does hint that the Fed may underperform on rate hikes. This underperformance seems to have been perpetual since rate collapsed back in 2008.

We talk about Elliott Wave patterns in the main FX, commodities, and DJIA markets. Feel free to register and join me in the US Opening Bell webinars to discuss the markets and patterns. The timing and locations of the webinars are listed on the registration page. Register and join here.

Gold Prices Longer Term Corrective Pattern

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Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

8 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

8 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

8 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