Analys från DailyFX
EUR/USD Volatility Measure Indicates Tightly Coiled Market
- EUR/USD regime shift coming?
- Long term AUD/USD bear trap
- Kiwi re-takes pre-Brexit high
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EUR/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
High Frequency Trading Tools
-FXTW wrote in early May that “EUR/USD broke through (resistance) on an intraweek basis but finished the week with a long upper wick that warns of a ‘bull trap’. It seems right to be (long term) bullish given the 31 year trendline support but the breakout may have to wait a bit. As always, define your risk points (read more about traits of successful traders here). FXTW was also of the mind however that the May low at 1.1097 would hold…then Brexit happened. A broad view reveals that nothing has really changed however. 52 week Bollinger Band ® width on EUR/USD is at the lower end of its historical range. Volatility is mean reverting so prepare for a change in market conditions from range to trend.
-For forecasts and 2016 opportunities, check out the DailyFX Trading Guides.
GBP/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-The gap to open trading post-Brexit is thus far of the breakaway variety. The current level (slope lines) and/or 1.2500 could inspire a ‘squeeze’ as part of consolidation before another leg lower. 1.2500 relates the 2009-2014 range (127.2% of that range from the 2014 high) and decline from 2007 (decline from 2014 = .618% of 2007-2008 decline). Former supports at 1.3500-1.3700 should now be watched for resistance. Remember, there is a 96 month (8 year) cycle low count.
AUD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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-There is no change to the weekly AUD/USD analysis. “AUD/USD is constructive because former support turned resistance was support again several weeks ago (from a parallel). What’s more, this week’s low registered a few ticks above the opening price for the year (we call this the ‘touch and go’ over at SB Trade Desk). The next decision point may be above .7700 (the next parallel).”
NZD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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-The last NZD/USD weekly update noted that “a long term parallel and major horizontal levels (including the 1988 high) could cap the rally from August 2015 while a break above this level would be a significant development. Bottom line, the current juncture commands attention as a major decision point.” Kiwi has taken out the pre-Brexit high and a breakout targets the .7500 area. The 50% retracement of the decline from 2014 is .7520 while the 2005 high and 2012 low are near .7465.
USD/JPY
Monthly
Chart Prepared by Jamie Saettele, CMT
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-USD/JPY is in freefall. FXTW thought that the low at 103.56 would prove more significant given the presence of the May 2013 high at 103.74 but also noted that “the next level of interest would not be until the 2000 and 2014 lows at 100.74-101.26.” Much to the chagrin of the technician (but not the trader…), a ‘shock’ event resulted in panic below 99! Price has stabilized in the vicinity of the noted 2000 and 2014 lows but whether or not the last week is a pause or a change in trend is unanswerable. Strength above 105.40 is needed in order to suggest that the upside is again viable. Until then, the area around 95 (next historical inflection point and 61.8% of rally from 2011) looms as a magnet.
USD/CAD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-Previous comments noted that “USD/CAD has carved a bullish engulfing candle at major support. The low just made could be significant.” The bullish engulfing is still there of course but the rally has failed at the 55 week average. FXTW pays attention to this because this average was support for the last 3 years. Former support just provided resistance so USD/CAD may be transitioning to a bearish phase.
USD/CHF
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-FXTW was following a bullish wedge pattern from the November high. This pattern completed on 5/18. The pattern then failed on 6/6. A failed bullish pattern serves as a bearish warning. In fact, FXTW wrote recently that “a failed wedge would not be a surprise given the struggle at LONG TERM resistance since November.” Weakness below .9440 could usher in a ‘waterfall decline’.
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
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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
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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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