Analys från DailyFX

GBP/USD Technical Analysis: Pound Falls after U.K. Inflation Disappoints

Published

7 år ago

15 augusti, 2017

DailyFX

To receive James Stanley’s Analysis directly via email, please sign up here.

Talking Points:

– The British Pound is heading-lower after another disappointing inflation report.

– Cable is moving-down to an area of potential support around the July low, and this zone can assist with both long and short-side approaches.

– If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our IG Client Sentiment.

In our last article, we looked at the British Pound after a dovish Bank of England meeting sent the currency lower from fresh 2017 highs. The Non-Farm Payrolls report that took place a day later helped with the bearish move, as a short squeeze in the U.S. Dollar helped to drive prices in GBP/USD down to the psychological level of 1.3000. But as British data continued to disappoint through last week, that 1.3000 level gave way, eventually becoming resistance and continuing to show as such until we walked into the most recent U.K. inflation report this morning.

In that inflation report, prices did not rise as much as feared: U.K. inflation came-in 2.6% for the month of July, matching the June print and below the expectation of 2.7%. As we had seen with the June data, this tamer read of inflation removes some pressure from the Bank of England, who are potentially looking at ‘one and done’ rate hikes in the effort of quelling those rising prices. The near-instantaneous response from markets after that inflation print came-in was a drop in GBP, as GBP/USD fell through the previous support floor, as well as the 50% Fibonacci retracement of the most recent bullish move.

GBP/USD Four-Hour: Cable Falls Through Support Following U.K. CPI

Chart prepared by James Stanley

This bearish move in GBP/USD has brought the pair closer to a longer-term bullish trend-line, which can be found by connecting the March and June lows. Just a bit below this trend-line, we have another key level around the 1.2800-handle, as the prior test of support aligns with the 38.2% retracement of this major move (highlighted in blue, below).

Chart prepared by James Stanley

Given the veracity of recent declines, for those that are looking to play the long side of the pair, awaiting support around this trend-line down to 1.2826 is crucial. We previously discussed how traders can use price action to confirm support and resistance; and in this situation of traders looking to play a short-term reversal into the intermediate-term trend, patience is of the upmost importance in ensuring that support actually shows in this zone before looking to get long.

This zone of potential support can also assist with the short-side continuation approach. For those that are looking at taking on bearish exposure, a break of this zone can open the door for such plays, with traders looking for a break of the July low before entertaining options for bearish exposure. Upon a break of this support, traders can look to re-assign this area as resistance, looking to sell off of the zone around 1.2809 with anticipation of further lows (shown in green on the below chart).

Conversely, if the low around 1.2809 is not taken out, traders can look to play resistance off prior support (shown in red, below), between 1.2928-1.2955. If resistance shows in this zone, traders can look to place stops above the prior swing-high, around 1.3032 in anticipation of bearish continuation.

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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

To be added to Christopher’s e-mail distribution list, please fill out this form

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