Analys från DailyFX
Large Degree Yen Correction Takes Hold; GBP Telling Us Something?
- GBPUSD Outside Day Reversal From Major Level
- USDJPY Former Highs of Interest at 101.52 and 100.60
- USDCHF Trendline Re-Test
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Weekly
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-EURUSD remains capped by the trendline that connects the 2008 and 2011 highs. This week, price found low at the line that extends off of the September and November lows.
-The late December failure still raises the possibility of a double top with the October and December highs. The pattern would trigger below 1.3294 and yield a 1.2757 objective. This level is in in line with the 2013 low.
-1.3620 and 1.3800 are levels to keep in mind as support and resistance next week.
Weekly
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–After trading to its highest level since April 2011 on Friday, GBPUSD carved a large outside day reversal. This is the kind of action that could lead to a larger top. Weakness below the line that extends off of the 2009 and 2011 highs and specifically 1.6308 would suggest as much.
-1.6400 is possible support next week.
Weekly
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-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067. Significant demand may not exist until this zone.
-The market has followed through on last week’s huge outside week. The implications are that the outside week serves as the ‘kick-off’ for the next leg of the bear. Keep .8765-.8800 in mind as resistance.
Weekly
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-NZDUSD spiked through the November high and reversed just shy of the September high 2 weeks ago (the rate is little changed this week). .8450-.8550 has been an area that ‘created’ a number of important tops in recent years.
-Longer term trend remains sideways, possibly within the confines of a triangle (since 2011). In general, the market has responded to longer term resistance (highs in March 2012, December 2012, February 2013, and October 2013).
Weekly
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-“USDJPY is respecting the gap from October 2008 at 105.30. This level and the outside day seen on January 2nd should at least warn of a pause in the uptrend.”
-“An exceptionally steep trendline that connects the lows from November 2012 and October 2013 just about intersects with the July high of 101.52 next week. Obviously, it would take an exceptional decline to reach that level. The line that connects the 1998 and 2007 highs is at about 106.70 next week.” The mentioned support wasn’t quite reached but price will probably open near it next week (line is at 102 next week). Highs from 2013 at 101.52 and 100.60 are possible supports.
-There is an Elliott wave case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.
Weekly
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–Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low. Such market swings tend to exhibit extreme rates of change (so please refrain from terms such as ‘overbought’ or ‘divergence’).
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
Weekly
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-The USDCHF may have completed a corrective decline from the 2012 high in late December. The decline is in 3 waves, channels in a corrective manner (connect the origin of waves A and C and project a parallel from the terminus of wave A to project the terminus of wave C), and consists of 2 equal waves (would be exactly equal at .8888…the lowest weekly close was actually .8885).
-“The break above the trendline that originates at the July high adds credence to a larger trend change. Do be aware of the presence of the June low at .9129 and November high at .9250 as levels that could provoke a reaction.” A reaction has taken place indeed and the rate is testing the mentioned line from above as support. Keep .8910 in mind as support.
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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- Bombs to ”ceasefire” in hours – Brent below $70
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