Analys från DailyFX
Gold Prices Fall Through Support: Is the Bullish Trend Breaking Down?
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- Gold Technical Strategy: Intermediate-term mixed; Near-term aggressively bearish.
- Gold prices set a new high two days ago, but have promptly reversed to break below prior swing-low support.
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In our last article, we looked at Gold prices as they were adhering to an aggressively bullish channel, connecting from the lows in December to account for an approximate 8.6% bump in a little over a month’s time. But to put this move in proper scope, this bullish run was fresh on the heels of a bearish drive that started on the night of the U.S. Presidential Election that spanned more than -16% in a little over a month.
As we had written in our last article, the 50% retracement of that post-Election move sits at $1,230.07; and should price action break-above this zone, then the prior bearish trend would be nullified. This hasn’t happened, and instead, that bullish trend has appeared to have begun breaking down after a false top-side breakout yesterday; falling through a widely-watched zone of support from $1,200.51 up to $1,204.76.
Chart prepared by James Stanley
For those looking to implement bearish approaches, caution should be warranted as Gold has become even more volatile than usual after the election of Donald Trump as President of the United States. Next week will likely keep USD volatile with both the Federal Reserve and Non-Farm Payrolls on deck and this, of course, can hit Gold prices.
For those looking to trade Gold prices lower, waiting for a deeper break of support could signal that bears may be able to actually continue driving price action with the aim of continuation of the ‘bigger picture’ down-trend. An aggressive swing-low showed up at $1,187.50 just three weeks ago, and this can be a novel area to look for indications of bearish continuation. But once that support level breaks – traders are likely going to want to wait for resistance to show before triggering short, and the area of prior support from $1,200-$1,204.76 could be an opportune area to stage such an approach.
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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