Analys från DailyFX
Looking for an Early Week US Dollar Low to Execute Trades
Trade setups are coming into focus. Look for an early week USDJPY low (final washout?) as well as turns in the EURUSD and GBPUSD. The USDCHF may have already formed an important low. There is a compelling setup in the EURAUD as well.
USDJPY
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The USDJPY has declined for 4 consecutive weeks. In fact, 4 week rate of change (see next chart) can be considered extreme at these levels. In the last 10 years, 4 week rate of change has only been lower just once; the week that ended 10/24/2008. Slightly less extreme RoC figures were registered in May 2006 and March 2008. A final washout into slightly lower levels would be ideal. Specific levels to keep an eye on are 92.55 and 91.96. Watch the downward sloping corrective channel as well (blue). On the upside, 96.95 is a significant level (big volume close) as is 97.52 (4/5 and 6/7 closes…both were followed by gaps higher). Friday’s DailyFX PLUS webinar provides additional detail.
FOREX Trading Strategy: Looking for an early week low.
USDJPY
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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USDCHF
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The USDCHF rallied for 22 weeks off of the 2011 low (8/12/11 to 1/13/12) and has traded sideways for the last 73 weeks. Consolidation has lasted 3.3 times (73/22) longer than the previous trend. This week’s low was registered at the trendline that extends off of the October 2011 and 2013 lows and just 8 pips below the open for the year.
FOREXTrading Strategy: Long while above .9110
EURUSD
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Decent selling pressure during the European session on Wednesday and Thursday may have been the ‘false start’ lower that are common at tops. There are levels just overhead that could produce a sharp reversal…the 2/7 close at 1.3396, 2/20 high at 1.3433, and the trendline that extends off of the 2011 and 2013 highs (a little over 1.3450 for the rest of the week).” One more high into 1.3400/50 may well finish the sequence from mid-May.
FOREXTrading Strategy: Expecting a top …watch with USDCHF. A new high in EURUSD that is not confirmed by a new USDCHF low would be a ‘tell.’
GBPUSD
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The rally from the March low would consist of 2 equal legs at 1.5783. Don’t lose sight of the big picture. A year triangle was broken to the downside in February and price has returned to the breakout point. In fact, the line that connects the 2009 and 2012 lows (in red on chart) is just above 1.5783 on Friday. The 61.8% retracement of the decline from the January high is 1.5788 and the November 2012 low is 1.5822.
FOREXTrading Strategy: Same as EURUSD…can’t say we’ve topped yet but closing in on one.
EURAUD
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: The EURAUD has met the objective derived from the early year 1.3190-1.2220 range (add the width of the range to the breakout price of 1.3190 in order to achieve 1.4159). Action this week is consistent with a top. A gap higher Monday was followed by an outside day on Thursday. The weekly reversal also occurred slightly below the August 2011 high (1.4261) and right at the 2011 weekly closing high (1.4233). The top of former congestion at 1.3591 is of interest on the downside.
FOREXTrading Strategy: Expecting a deeper AUDUSD pullback anyway so don’t be surprised to see strength into 1.4100. Will short 1.4100 if reached.
— Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele
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Jamie is the author of Sentiment in the Forex Market.
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
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
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
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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