Analys från DailyFX

Is the EUR/USD 30 Month High a Breakout or Fake Out?

Published

7 år ago

27 juli, 2017

DailyFX

EUR/USD captured headlines today as it printed a fresh 2.5 year high on the heels of Yellen cautiously looking at inflation. We have been bullish EUR/USD since May 22 targeting a retest of the 1.16 highs. Now that we have arrived, what’s next? Is this new 30 month high a fresh breakout or a fake out to draw the bulls in?

The model we are following shows the shorter term trend may be nearing the end of this upward trend. Multiple models are pointing to a sell off towards 1.1250-1.1400. From there, the models begin to diverge.

From a bigger picture perspective, the Elliott Wave pattern appears to be a large expanded flat pattern that began March 2015. (For further study on flat patterns, watch this webinar recording on the various types of flats and how to trade them.)

We identified this flat as a potential pattern on the break above 1.10 back in May 2017. The wave relationships near Wednesday’s high of 1.1740 are quite interesting.

There are several methods to target the ‘C’ wave of an expanded flat pattern. One such method is taking the distance of the ‘B’ wave overshoot and adding it to the end of the ‘A’ wave.

The ‘B’ wave low of 1.0340 is 122 pips below the beginning of wave ‘A’ at 1.0462 (see black arrow on chart). We then add 122 pips to the price at the end of wave ‘A’ in April 2016 1.1616 to arrive at a target of 1.1738, which is quite close to Wednesday’s high of 1.1740.

We cannot say with certainty that the pattern since March 2015 is over, but we are getting close. You see, ‘C’ waves of flat patterns are motive waves so they subdivide in five waves. This current five wave move is shaping up like an impulse. (For further study on impulse patterns, watch this webinar recording on how to identify and trade them.)

I can count five waves complete, but it has a shape that makes it look like an extended third wave implying a fourth wave dip prior to a fifth wave higher and retest of 1.17. Third waves tend to have Fibonacci relationships with wave 1 and a 2.618 extension enters the picture near 1.1776.

Sentiment is still heavy towards the bears that also implies this uptrend may not be completely exhausted. IG Client Sentiment currently sits at -3.50. Check out the live trader sentiment reading and learn how to trade with sentiment with our IG client sentiment guide.

Bottom line, we have multiple wave relationships showing up in 1.1738 to 1.1776 pointing to a correction back towards 1.1250-1.1400. For the time being, this breakout could be a fake out. This is not a top I am comfortable shorting as the trend is still up. However, for those who have been long, you may want to manage risk accordingly.

Unsure of the longer term direction of EUR and USD? Grab these quarterly forecasts.

—Written by Jeremy Wagner, CEWA-M

Discuss this market with Jeremy in Monday’s US Opening Bell webinar.

Follow on twitter @JWagnerFXTrader .

Join Jeremy’s distribution list.

Recent Elliott Wave article by Jeremy:

Gold Prices Advance in the Middle of Triangle Pattern

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

To be added to Christopher’s e-mail distribution list, please fill out this form

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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