Analys från DailyFX
Gold Prices Gap-Lower Following French Elections
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- Gold Technical Strategy: Intermediate-term bullish, short-term bearish.
- Gold prices have broken down to set a short-term lower-low, after setting another ‘lower-high’ on to close last week.
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In our last article, we looked at Gold prices holding support as we approached the weekend with French elections looming just around-the-corner. Just a week ago, Gold prices set a fresh five-month high, extending the rally that had started after the Fed’s March rate hike. But price action ran into a longer-term descending trend-line, and given the event risk on the horizon, there was little motivation for bulls to prod prices-higher beyond that level of resistance.
This weekend’s French elections saw Emmanuel Macron and Marine Le Pen advance to the next round, with the vote to be held on May 7th, 2017. The immediate market impact was one of exuberance as soon as trading opened for the week, as risk-on rallies sparked around-the-world. Equity markets throughout Asia and Europe are up briskly on the morning, and Gold prices have moved-lower as risk appetite has seen ‘save haven’ bets leave the market.
Gold prices dropped down to the ‘s2’ zone of support that we were looking at in our last article after holding at ‘s1’ through much of Friday.
Chart prepared by James Stanley
With the lower-lows and lower-highs being seen on the hourly chart, this could open the door for additional weakness in Gold prices’ near-term price action. Given the extreme early stage of this move-lower after a rally that had, essentially taken on two different phases after the Federal Reserve hiked rates in December and then again in March; and traders might want some element of confirmation before looking to chase prices-lower.
For traders looking at short exposure in Gold, credence would need to be given to the continued support showing-up around current levels in the $1,270-range. Traders can look for a ‘lower-high’ below the Friday-high in the effort of controlling risks in a potentially new trend-lower in Gold. If a lower-high does not develop, traders can let prices break-down to further prove continuation potential of a deeper bearish move, after which this current zone of support around $1,270 can be re-assigned as lower-high resistance.
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.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
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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