Analys från DailyFX
Gold Prices Run to Resistance Zone; Is the Rally Over?
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- Gold Technical Strategy: Intermediate-term (past 3 months) still bearish, short-term (past month) bullish
- The run-higher in Gold prices has run into a widely-watched resistance zone.
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In our last article, we looked at the recent top-side move in Gold prices with the question of whether this was a retracement as part of the ‘bigger picture’ trend lower or if we were, in fact, seeing a trend-change. Given how incredibly oversold Gold prices had become during the ‘Trump Trade,’ it made sense for a retracement to develop after an extreme move-lower with a lack of additional trend-side drivers; but a week later, prices have yet to resume that down-ward trend and traders will likely want to take a step back in order to discern near-term directional possibilities.
In our last article we had looked at levels at $1,188 and $1,200 and today, we’re going to add in a 3rd level for traders to watch at $1,204.76, which is the 38.2% retracement of the ‘post-Election’ move in Gold prices. These three prices can each act as resistance to collectively produce a ‘resistance zone’ in which traders can look for a near-term top to form in the effort of trading the bigger picture trend-lower. If price action in Gold breaks above $1,205, traders will likely want to re-evaluate the bearish trend and move-forward with a more-bullish bias.
Chart prepared by James Stanley
For traders looking to time bearish entries on shorter-term charts, price action swings around $1,180 and again at $1,172 could open the door to bearish-continuation strategies; looking to use near term resistance coupled with support breaks to indicate the possibility of the ‘bigger picture’ down-trend resumption.
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
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