Analys från DailyFX
Gold Prices Continue Descent Through Key Support Zone
Talking Points:
– Gold technical strategy: Long-term mixed, Intermediate-term bearish, short-term bearish.
– Gold prices have continued to slide-lower after last week’s Central Bank outlay.
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In our last article, we looked at the continued slide-lower in Gold prices after the double top had formed around the prior April high. After that top was set, Gold prices continued to drive lower, eventually re-entering the descending channel that’s held a bulk of Gold price action since last July.
Chart prepared by James Stanley
During this recent bearish run, Gold prices crossed below a key support level at $1,248-$1,249, as this is the 50% marker of that bearish run that began last July. This is the same set of levels with which support had formed at the 38.2% retracement earlier in May, right around the time that James Comey was fired. The 50% retracement of this Fibonacci setup had helped to set support in March, leading into April; and this level is also very near the $1,250 psychological level that had helped to set support in Gold prices around the Brexit referendum last year.
Chart prepared by James Stanley
Given that Gold prices are seeing short-term bearish momentum line-up with a longer-term down-trend, traders would likely want to move-forward with a bearish bias. The fact that we’re trading below a key support zone is in-and-of-itself a bearish quality; but given the veracity of support that we’ve seen around this level in the recent past, traders would likely want to wait for a more advantageous entry point before initiating short positions, or at the very least exude a healthy dose of caution against chasing the move-lower. On the chart below, we’re looking at two potential zones inside of recent price action that could offer that ‘lower-high’ point of resistance.
Chart prepared by James Stanley
If price action does not pose a bounce in the near-term, traders can re-apply this current zone of support as a future instance of resistance. If prices continue breaking-lower from here, traders can wait for ‘lower-high’ resistance to show around this zone of prior support.
For those looking to add bullish exposure to Gold, they’d likely want to wait until there is some evidence of a near-term low being in play, which at this point does not exist.
— 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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