Analys från DailyFX

GBP/CHF Triangle Pattern with an Elliott Wave Twist

Published

11 år ago

26 februari, 2014

DailyFX

Talking Points:

Daily Triangle Consolidation in GBP/CHF
Clear Elliott Wave Pattern Also in Progress
The Ideal Time Frame for Selling GBP/CHF

As many currency pairs move into more confusing territory amid deeper pullbacks on their respective daily charts, the market environment is becoming one where probability favors the downside in many cases.

There are several valid responses to these conditions, one of which is to reduce risk on each trade. This will be particularly attractive to those who have been on winning streaks and wish to preserve recent gains.

Also, bear in mind that it’s best to not try to outsmart the market, so the best response is still to steadily take trades as the set-ups are being presented, and then manage each position as the market response develops.

The daily chart below of GBPCHF reflects a longer-term uptrend, but also a triangle-type consolidation pattern. Applying a Fibonacci expansion to recent price action reveals that there is a level of hidden resistance at 1.4845. Alone, this would be insufficient reason to take the trade, but Elliott wave theory provides another potential reason.

Guest Commentary: Daily Triangle Consolidation in GBP/CHF

According to Elliott wave theory, every triangle should consist of five main waves, each containing a three-legged move. Thus far, there have only been three of these waves, which suggests that the current upswing should soon turn around within the triangle.

On the daily chart below, the 38.2% Fibonacci expansion level has been retained for reference, and a rough plot of how it should develop according to classic Elliott wave theory has been supplied. Of course, in the real world, anything can happen, but the best response is simply to enter short at the overhead resistance level in anticipation that this pattern will develop and ultimately complete.

Guest Commentary: Elliott-Inspired Set-up in GBP/CHF

The four-hour chart below readily provides a resistance zone using the 38.2% Fibonacci expansion level coupled with previous support and resistance for GBPCHF. This key zone where a reaction is likely to materialize is 1.4845-1.4899, or 54 pips deep. That level of risk is very much acceptable for any cross pair involving the British pound (GBP).

Guest Commentary: Key Resistance Zone for Selling GBP/CHF

A move to the bottom of the triangle formation would yield 100 pips or more, and although this trade is slightly less “juicy” than some others in terms of risk profile, when considering the consolidating nature of the markets and the need to be defensive in trade management, it is still quite appealing.

Any potential trade entries should be found on the hourly chart (not shown), which will facilitate a reduction in risk. Acceptable triggers will include pin bars, bearish engulfing patterns, and bearish reversal divergence.

Finally, and as always, two or three tries may be needed to trade this set-up, and indeed, multiple positions should be used in order to scale out should the trade begin to hesitate after the entry.

By Kaye Lee, private fund trader and head trader consultant, StraightTalkTrading.com

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 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

7 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

7 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