Analys från DailyFX
Gold Prices Build Bullish Channel, Rally to Deeper Resistance
Talking Points:
– Gold prices have finally found some element of strength after ‘bottoming out’ last Thursday.
– Since last Thursday’s low, Gold prices have built-in to a relatively smooth bullish trend channel; but given the veracity of the prior move-lower, intermediate and longer-term stances would likely want to remain bearish until more bullish confirmation is seen.
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In our last article, we looked at Gold prices after some element of strength finally showed following three weeks of consistently losses. At the time, Gold prices had found a quick bout of near-term resistance around the $1,225-handle, but as we warned, given the extreme over-sold state of Gold prices before that strength began to show, and we could be looking at a deeper retracement as prices moved-higher. This has led into a third day of gains for the yellow metal.
Chart prepared by James Stanley
Since the low was set last week, Gold prices have continued to march-higher on the chart, running in a fairly consistent trend channel as bulls have tip-toed into the market with a bit more motivation.
Chart prepared by James Stanley
For traders looking at short-term stances in Gold prices, topside plays could be open under the presumption that risk is kept relatively tight while trading price action within the bullish trend channel. For those looking at intermediate-term, or longer-term propositions, the bearish side will likely remain as the most attractive until a deeper bullish move takes out the $1,250 area of potential resistance. On the chart below, we’re looking at three potential areas to watch for resistance above current price action, but below the $1,250-zone. These levels are taken from prior price action swings, and reside at $1,239, $1,243 and $1,248. Should each of these levels get taken out by rising prices, no short setup is available and traders will likely want to begin positioning for bullish scenarios in Gold prices.
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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