Analys från DailyFX
Is EURUSD Repeating a pre-euro Trading Pattern?
- EURUSD 1997 analog
- GBPUSD faces resistance at 1.57
- NZDUSD Fibonacci confluence at .64
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Weekly
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-“The tightening range since the May high could compose a triangle within a larger advance from the March low.” A broader range does of course remain possible but with EURUSD breaking support this week, one must consider a more immediate bearish alternative. Comparisons with 1997 (pre euro trading but a calculated value is plotted) price behavior are striking. In both 1997 and 2015, the rate plunged out of the gate into March. Weekly RSI registered extremes the weeks of 3/3/97 and 3/9/15. Ensuing corrections stretched into the weeks of 5/19/97 and 5/11/15. In 1997, EURUSD dropped sharply into the week of 8/4 before making reversing sharply to return to its May high. If something similar happens here, then EURUSD would trade down to about .9840 in August before trading back to 1.1450+.
Weekly
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-“GBPUSD has broken above its 52 week average for the first time since September 2013. There are hurdles to clear from slope resistance (on various time frames) up to about 1.60. As such, a period of consolidation below 1.60 may be in store before an attempt on 1.64+ (2 equal legs from the April low).”
-The ‘period of consolidation’ turned into a 6 figure decline from well-defined slope resistance. The rate faces resistance up to 1.5705/10.
Weekly
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-“A slope confluence pinpointed the May high, which keeps the broader trend pointed lower. A long term level to be aware of in AUDUSD is the line that connects the 2001 and 2008 lows, which is near .7100. Be aware that the range that has been underway since April could persist for months and morph into a triangle or flat pattern.” The immediate picture is bearish as long as price is below .7740. Range expansion objectives yield .7143 and .6902.
Weekly
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-“One can’t help but notice that an epic double top is possible with a target of .5898. That would trigger on a drop below .7370.”
-“A bearish wedge pattern has formed and yields an objective of .6607.” Look towards the mentioned objectives (.6607 and .5898). The wedge objective has been reached as has the 2010 low at .6560. The next levels to be aware of are .64 (61.8% retracement of the 2009-2011 rally and 50% retracement of the 2000-2011 rally) and .60 (long term double top target).
Weekly
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-“A USDJPY breakout from the 6 month coil would open up 123.16-124.13 (high close from June 2007 and 2007 high). A measured objective from the pattern yields 125.72 and 128.12.”
-“USDJPY ended up trading to 125.85 (the mentioned 125.72 was the December range x .618 + the December high…basically a Fibonacci range expansion). Failure at long term uptrend resistance indicates potential for an important top to form. As I type, there are 2 days left in June and USDJPY is little changed for the month (month open is 124.10). In other words, a monthly doji could form…at a 20 year trendline (former support…may provide resistance now)!”
-“June’s trade produced a monthly key reversal in USDJPY.” USDJPY has snapped back but a break above the long term resistance confluence (uptrend resistance and the line from the 1995 and 2005 highs) is still needed in order to minimize downside risk.
Weekly
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-“A 10 month trendline has supported USDCAD on recent dips. The development indicates potential for resumption of the broader bull move.” USDCAD has broken out. 11 year highs aren’t far off. The 2009 high is at 1.3062 (just below the 127.2% extension of the March-May range, which is at 1.3083).
Weekly
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-“The break above near term slope this week indicates a short term behavior change. .9250 needs to hold in order to look higher. Watch for resistance near .9600 (50% from the March high at .9599 and 2 equal legs from the May low at .9621).”
-“USDCHF dropped into .9250 this week (low was .9242) and promptly rocketed to .9500. Focus is higher as long as price is above .9242. The mentioned .9600 may provide resistance. Near term support is estimated at .9330. A break above .9600 would target .9913 (Fibonacci).” .9330 held as support on 7/10 and the rate has reached initial resistance at .96. A more well-defined level is probably .9720 (61.8% retracement of decline from March high and 4/23 high).
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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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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