Analys från DailyFX

GBP/USD Technical Analysis: Despite the Drivers, the Range Still Applies

Published

8 år ago

29 mars, 2017

DailyFX

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Talking Points:

GBP/USD Technical Strategy: Long-term: range-bound; short-term: bullish with retracement after Article 50-trigger.
Cable put in an impressive bullish run after the Federal Reserve rate hike; but a bit of weakness has developed after comments from MPC member, Ian McCafferty yesterday.
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Near-term price action in Cable had grown quite bullish after the Federal Reserve’s March rate hike. After running down to test the zone around 1.2100 just ahead of that hike, prices had moved all the way-up over the 1.2600 level to open this week. In our last article, we looked at how the combination of U.S. Dollar weakness along with the recent tick-higher in U.K. inflation had contributed to the further-development of that move; and this continued in a rather consistent fashion as price action in GBP/USD exhibited a clean-run of higher-highs and higher-lows.

The premise of this move was very much driven by the prospect that the Bank of England may have to respond to these stronger inflationary forces by rolling out a series of ‘less loose’ policy options and, perhaps even eventually, looking at the prospect of a rate hike. This was very much along the lines of what Ms. Kristin Forbes was pointing out when she decided to dissent at the BoE’s most recent rate decision as she gave the first BoE vote for an actual rate hike after the Brexit referendum.

This theme faced pressure yesterday around the comments of MPC member, Mr. Ian McCafferty. Mr. McCafferty gave a very sanguine outlook towards inflationary pressures while also providing a fairly bearish outlook for forward-looking economic conditions. Mr. McCafferty appeared to be in no hurry to hike rates, and this started a pullback in that recent bullish run in the Cable that’s extended into this morning as the U.K. triggered Article 50.

Chart prepared by James Stanley

So, while the headlines will likely associate this recent bout of weakness in the British Pound with the Article 50 trigger, deductively that makes little sense as the bulk of this move transpired after Mr. McCafferty allayed the expectation of near-term rate hikes and well-ahead of Article 50.

This is important because it’s that potential for ‘less loose’ policy that will likely drive GBP price action in the coming months. And on that front, we’re unlikely to get any confirmed information until either a) U.K. inflation prints continue to come-out well-above market expectations or b) the Bank of England capitulates on the idea of uber-dovish monetary policy as a proactive response to Brexit, which we’ve already seen early signs of with Ms. Forbes and the meeting minutes from the last BoE rate decision. For the second of those scenarios, we’ll likely be waiting until the next Super Thursday at the BoE to get updated inflation expectations, and that doesn’t happen until May 12th.

Longer-term price action in Cable remains in the range-bound formations that’s denominated GBP/USD price action since the ‘flash crash’ in October. Until this range breaks, there is little reason to expect as such.

Chart prepared by James Stanley

Short-term: There are setups that can be worked with on both sides of GBP/USD. For those looking to play strength into the longer-term zone of resistance around 1.2600, stops could be set below the prior swing-low around 1.2318 to look for a better than 1-to-1 risk-reward ratio. And on the bearish side, traders could look at stops above the 1.2500 psychological level accompanied with targets cast towards 1.2300, and/or 1.2250.

Chart prepared by James Stanley

— Written by James Stanley, Analyst for DailyFX.com

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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

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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

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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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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

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