Analys från DailyFX
EURUSD Set Up for More Losses; ECB on Thursday
What’s inside:
- EURUSD rejected from around the 2012 low leads to most bearish-looking price action in months
- US Dollar Index reverses from bottom of major long-term support zone, points to tradable low
- ECB on the docket for Thursday, could be a significant catalyst
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Last week, EURUSD put in a strong daily reversal-bar with the wick of the candle just piercing through the 2012 low. The rejection at major long-term resistance came as no surprise as the DXY (of which the euro constitutes ~57 of the index) was trading at the bottom of a long-term support zone. In last week’s forecast, we made note that a reversal could arise quickly, and that it did. Further validating the Tuesday reversal was the rejection on an attempt to trade higher on Friday. The weekly price action was the most bearish we’ve seen in several months. We look for the trend-line off the April swing-low near 11700 to be thoroughly tested in the week ahead. A break below this line of support along with the August low at 11662 will likely usher in an even broader move lower.
EURUSD: Daily
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US Dollar Index: Weekly
Dialing in on the 4-hr chart: Before we can think about probing deeper levels there is support in the immediate vicinity of Friday’s close by way of confluence between a trend-line running up from June and horizontal support around 11825. A break below there will open a path up towards the beforementioned levels near 11700 and lower. We may see an initial attempt to bounce again, but look for it to be short-lived.
EURUSD: 4-hr
On Thursday, the ECB meets and the market will be looking for further clarification on when the central bank plans on scaling back its asset purchase program. On Friday, Bloomberg reported that the ECB may not make a final decision until a couple of weeks out from the end of the current program. This headline quickly put a dent in the rally which was underway following the weaker than expected U.S. jobs data. Next week could be a very telling one for the euro…
Related Reading: Did the US Dollar Just Bottom? Bullish vs. EUR, GBP, JPY
—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.
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.
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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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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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