Analys från DailyFX
GBP/USD Technical Analysis: Cable is Testing Support
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Talking Points:
- GBP/USD Technical Strategy: Prior bullish-move in question, price action currently testing support.
- While GBP seemed rather resistant to USD-strength in the month of November, the past two weeks (ECB, then Fed) have seen USD-strength show more prominently against the British Pound.
- If you’re looking for trading ideas, check out our Trading Guides.
In our last article, we looked at how the British Pound, surprisingly, was one of the few currencies in the month of November that actually kept-up with the U.S. Dollar’s blistering up-trend. And there were numerous reasons for it: We outlined many of these in the article entitled, Why Did the British Pound Stop Going Down.
But as fortuitous timing would have it, shortly after that article was published the Federal Reserve got more hawkish with interest rate expectations for 2017, 2018 and 2019. As this was happening, USD-strength began to show even more prominently, and Cable broke below an aggressively up-ward sloping trend-line. Breaking below this bullish trend-line raises questions around bullish momentum in the pair; but current price action is still supported at the 1.2300-figure that has proven to be rather relevant to GBP price action over the past three months.
So, while the bullish up-trend in GBP/USD is in question after this trend-line break, traders would likely want to avoid calling this a ‘bearish’ setup until we get a sustained-break of support in the vicinity of 1.2300. Perhaps more to the point, with USD-stretched against many markets, showing as highs or lows in pairs like USD/JPY or EUR/USD; the deductive fact that we’re not at lows could make this appealing for USD-reversal scenarios.
Chart prepared by James Stanley
At issue for the bearish side of Cable is the fact that the U.S. Dollar continues to trade near 14-year highs. As we move towards year-end with a dearth of data or drivers, there may not be compelling-enough evidence to drive even deeper gains as we move into year-end. Those looking to accumulate long-USD exposure would likely want to look at a pair that’s been a bit more amenable for such a theme, like USD/JPY.
But for those that are looking to take on short-USD exposure, or for those looking to play the long-side of the Cable, GBP/USD could remain an attractive option until support at 1.2300 is taken-out by a sustained break.
— Written by James Stanley, Analyst for DailyFX.com
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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
—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.
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
To be added to Christopher’s e-mail distribution list, please fill out this form
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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