Analys från DailyFX
GBP/USD Technical Analysis: The Elusive 1.3000 Awaits
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Talking Points:
- GBP/USD Technical Strategy: Long-term mixed, intermediate-term bullish, near-term range-bound.
- Cable has put in another failed attempt to cross the vaulted 1.3000 psychological level.
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In our last article, we looked at GBP/USD testing a ‘higher-low’ support level shortly after the Bank of England’s most recent ‘Super Thursday’ batch of announcements. At that meeting, BoE Governor echoed the familiar dovish tone that he’s personified since even before the Brexit referendum; and as has become usual, the British Pound dropped as the BoE assured markets that they were, at least at this point, unmoved by the prospect of higher rates of inflation.
What was different from prior dovish outlays from Governor Carney was price action in the Cable; as this round merely brought prices down to test ‘higher-low’ support, still above the resistance zone that had pinned the currency down whilst in the range that showed-up after the ‘flash crash’ in October.
Chart prepared by James Stanley
The Theresa May-fueled breakout in latter April is what initially helped price catapult above this resistance zone at 1.2775. Since then, we’ve seen one quick test below this level, with support showing just days after the initial topside break at 1.2755.
On the resistance side of the coin, the 1.3000 level is proving difficult to break, as we’ve now seen three separate attempts by bulls to drive beyond this area. This morning brought on another ‘higher-high’, albeit temporarily, as price action tip-toed deeper towards 1.3000 before sellers jumped-in on the move. But we did get a technical higher-high to couple with this recent formation of higher-lows on the hourly chart.
Chart prepared by James Stanley
This can open the door for short-term momentum stances targeting the 1.3000 psychological level as a target. The prior swing-low around 1.2900 could be used for risk outlay to offer a slightly better than 1-to-1 risk-reward ratio up to the 1.3000 big figure.
Alternatively, those with intermediate-term, swing-trading stances can look to place stops below the ‘bigger picture’ swing low around 1.2829; while traders with a longer-term outlook would likely want to look to nest stops back below ‘post-Brexit’ resistance of 1.2750.
Chart prepared by James Stanley
— Written by James Stanley, Strategist 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
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You can follow Paul on Twitter at@PaulRobinonFX.
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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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