Analys från DailyFX
Gold Prices Continue Tumble into Deeper Support
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Talking Points:
– Gold Prices have been unable to catch a lasting bid, extending the down-side run into yet another support zone.
– Last week’s FOMC announcement catapulted Gold prices below the $1,250 support level, and follow-thru price action broke through $1,234 and $1,225. Price action is currently sitting in another confluent support zone between $1,215-$1,219; but will this be enough to stem the rampant declines?
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In our last article, we looked at the continued bearish move in Gold prices as the Yellow Metal furthered its already rather steep drop. At the time, the $1,250 support level was sitting underneath price action as another FOMC rate decision neared. But at that rate decision, the Fed appeared unmoved by a recent slowdown in U.S. data, incorporating the term ‘transitory’; which was largely inferred to mean that the Fed is still on track for their goal of three rate hikes in the calendar year of 2017.
The near-immediate impact to Gold prices was a plummet through that prior support level at $1,250; followed by another brief iteration of support at the $1,225 level. After this weekend’s French elections, we saw a quick move-higher after a gap-down; but sellers merely used this to re-load short positions, which brought an eventual break of $1,225.
Chart prepared by James Stanley
At this stage, the bearish move in Gold prices is fast approaching an up-ward sloping trend-line that can be found by connecting the February low to the March low. The projection of this trend-line runs directly into a confluent batch of support between $1,215-1,219.
Chart prepared by James Stanley
For those looking to add bearish exposure to Gold prices, there are two ways of moving forward. For those looking at a more conservative approach, they can await a re-test of one of those prior support levels as new resistance for trend-side continuation entries. For those that would be open to a more aggressive stance, a deeper support-break could also be usable; as the current confluent zone of support could be re-assigned as resistance should price action break-below this trend-line. On the chart below, we look at a series of levels that could be usable in the effort of finding the ‘lower-high’ 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
You can receive Paul’s analysis directly via email bysigning up here.
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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