Analys från DailyFX
FX Technical Weekly: Next Cycle Low for GBP/USD is Early 2017
- EUR/USD – 20 day range is insanely small
- GBP/USD relationship at 1.0970
- USD/JPY – watch 105.45 (May low)
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EUR/USD
Daily
Chart Prepared by Jamie Saettele, CMT
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-I’m running out of things to say about EUR/USD. This is a weekly report but I’m showing this daily chart to show that the 20 day range (closing prices) is now the smallest since just before the collapse. The range is a measly .92% right now. The lowest range 20 day range EVER was on 5/5/2014 at just .67%. The top was 3 trading days later. I’m wondering if the initial move out of the current tight range will similarly be a ‘false’ move before a trend takes hold.
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GBP/USD
Monthly
Chart Prepared by Jamie Saettele, CMT
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-The last update noted that “the importance of the current juncture cannot be overstated. If the July low gives, then there may be no support until early 2017 based on the 96 month (8 year) cycle low count.” That cycle count is shown on this chart. A price level of interest is where the decline from the 2014 high (1.7191) would be equal to the 2007-2009 decline in percentage terms (36% declines). The math produces 1.0970.
AUD/USD
Weekly
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-AUD/USD remains capped by major slope resistance after finding low earlier in the year at ‘macro’ slope support (see the link to the quarterly charts at the beginning of the report). The bullish breakout level (weekly closing basis) is .7719. Strength through there would signal that a basing process is complete for a move to the mid-.80s. Until then, scope remains for additional range trade with support near .7380 (October and December 2015 highs).
NZD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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-The last weekly update noted that “Kiwi ends the 3rd quarter at the 1985-1993 line, which has proved an important pivot throughout the decades. Remember, September’s rally was capped by the 2005 high and 2012 low at .7460. While not a monthly key reversal, the September candle sports a long upper wick indicating a good deal of overhead. Near term, .7200 is seen as the pivot.” The drop below .7200 casts Kiwi in a bearish light and focus is on .6900 (October 2015 high) before decent support registers.
USD/JPY
Weekly
Chart Prepared by Jamie Saettele, CMT
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-Last week’s quarterly updates remarked that “the area around 100 is clearly important too (see lows in 1999, 2000, 2005, 2014, and the 2009 high). In summary, the current level is massive support so don’t be shocked if USD/JPY surprises higher in Q4.” USD/JPY begins the 4th quarter on a positive note, not quite trading back to the September high. The big test for this rally is the May low at 105.44.
USD/CAD
Weekly
Chart Prepared by Jamie Saettele, CMT
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-There is nothing to add to the USD/CAD comments. “The dynamic with the 55 week average in USD/CAD is interesting. This average was resistance in May and July (hit it again this week). The average was support for the last 3 years so the fact that the average has been acting as resistance warns that a bearish cycle is underway. The target on a break under the May low would be the May 2015 low at 1.1919. Meanwhile, strength through 1.3300 could carry to 1.38 (not my ‘preferred’ view).
USD/CHF
Weekly
Chart Prepared by Jamie Saettele, CMT
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-USD/CHF continues to trade on a parallel to the 1985-2001 trendline. The parallel has been resistance since October 2006 on each advance so a break higher would be a game changer and target the trendline near 1.1500. Swissie has also reached an important pivot in time. Q3 is 63 quarters from the 2000 high. The 2000 high is 63 quarters from the 1985 high. The way I see it, the symmetry warns of a shift in conditions; from range to a MOVE. The 2011-2014 trendline remains the trigger for a downside break. Given the long term symmetry, caution is urged as per SNB history.
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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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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