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Forex: US Dollar Weighing its Options at 17-Month Trend Support

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Talking Points:

  • US Dollar Still Consolidating at Familiar Trend Support
  • SP 500 Sets New Record High Resistance Looms Ahead
  • Crude Oil Testing Key Support, Gold at Risk of Reversal

Can’t access to the Dow Jones FXCM US Dollar Index? Try the USD basket on Mirror Trader. **

US DOLLAR TECHNICAL ANALYSISPrices continue to consolidate above support at a rising trend line set from September 2012. A break above resistance at 10614, the 23.6% Fibonacci expansion, initially exposes the 38.2% level at 10673. Trend line support is now at 10553, with a reversal below that eyeing the February 17 low at 10520.

Forex_US_Dollar_Weighing_its_Options_at_17-Month_Trend_Support_body_Picture_5.png, Forex: US Dollar Weighing its Options at 17-Month Trend Support

Daily Chart – Created Using FXCM Marketscope 2.0

** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

SP 500 TECHNICAL ANALYSISPrices cleared resistance at 1851.40, the 2013 high, with buyers now set to challenge the 23.6% Fibonacci expansion at 1863.60. A break above this barrier targets a rising channel top at 1871.60, followed by the 38.2% level at 1881.30. Alternatively, a move back below 1851.40 eyes the channel bottom at 1838.70.

Forex_US_Dollar_Weighing_its_Options_at_17-Month_Trend_Support_body_Picture_6.png, Forex: US Dollar Weighing its Options at 17-Month Trend Support

Daily Chart – Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices put in a bearish Evening Star candlestick pattern below resistance at a falling trend line set from April 2013, hinting at a turn lower ahead. Negative RSI divergence bolsters the case for a downside scenario. A break below support at 1306.00, the 23.6% Fibonacci retracement, exposes the 38.2% level at 1281.71. Trend line resistance is now at 1344.54.

Forex_US_Dollar_Weighing_its_Options_at_17-Month_Trend_Support_body_Picture_7.png, Forex: US Dollar Weighing its Options at 17-Month Trend Support

Daily Chart – Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS – Prices are testing support in the 101.63-97 area, marked by the 14.6% Fibonacci retracement and a rising trend line set from mid-January. Negative RSI divergence argues for weakness ahead. A break below this barrier exposes the 100.53-73 area, defined by the 23.6% level and the December 27 high. Near-term resistance is at 103.41, the February 24 high.

Forex_US_Dollar_Weighing_its_Options_at_17-Month_Trend_Support_body_Picture_8.png, Forex: US Dollar Weighing its Options at 17-Month Trend Support

Daily Chart – Created Using FXCM Marketscope 2.0

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinonFX.

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Euro Bias Mixed Heading into October, Q4’17

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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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British Pound Reversal Potential Persists Heading into New Quarter

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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

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