Analys från DailyFX
Gold Prices Hold Support Ahead of French Elections
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- Gold Technical Strategy: Intermediate-term bullish. .
- Gold prices remain supported at the ‘S1’ level we’ve been watching at $1,279.29 as French elections near.
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In our last article, we looked at the recent trend-line inflection after Gold prices shot-higher on the heels of the Federal Reserve’s March rate hike. This trend-line can be found by connecting the July high to the November ‘election spike’ in Gold prices; and the projection of that trend-line has helped to cap the advance that began in mid-March. But sellers haven’t had a free line here, as price action has continued to find support around the ‘S1’ zone that we’ve been watching, which is the 38.2% Fibonacci retracement from the major move of last July’s high down to December’s low.
Chart prepared by James Stanley
With the first round of French elections set to take place on Sunday, there’s a logical reason for this continued banter between support and resistance in Gold prices. Likely, we’ll see Gold prices move with the results of this weekend’s election. Should either Jean-Luc Melanchon or Marine Le Pen make it into the next round, this can be seen as heightened geopolitical risk out of Europe, which will likely bring with it an extension of the up-trend in Gold prices. However, if we get a second round with Emmanuel Macron and Francois Fillon, that fear might take a back seat as fears of ‘bigger issues’ in Europe recede; and this could further allay those themes of geopolitical pressure that became prominent in early-April.
On the chart below, we’re looking at four different support levels with Gold prices (we’ve added a level at $1,270.94 since our last article), and these can be usable on either side of the trade. For bulls, these ‘zones’ could be areas for potential stop placement based on how much distance one might want to give to the trade. For bears, these zones can be targets for short-side positions. For those that aren’t sure or don’t have a bias or directional stance, waiting for next week’s open could be a very cogent approach given the potential for volatility around this weekend’s elections.
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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