Gold has found a ‘tradeable’ low. Early week focus is on positioning for a larger GBPUSD breakdown and identifying near term tops in the USDJPY and SP 500. Additional opportunities were discussed during Friday’s DailyFX PLUS webinar.
Gold
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: Gold traded to 1180 last week, not far from the 200% extension of the 1322-1488 range (1156) and July 2010 low (1157). I noted in the Daily Technicals that “it’s been gold’s tendency since September 2012 to ‘crash’ for 2-4 weeks and consolidate for at least a month.” Gold stabilized this week after a 2 week crash so recent action fits the pattern. More importantly, the rally from the low is impulsive (see next chart) and the decline corrective. The post NFP drop stopped just below the high volume area of 1210 as well. It’s worth noting that gold has found important lows in July since 2009 and that COT positioning is at levels last seen in 2005.
FOREX Trading Strategy: Triggered long at 1215, stop 1180. In Friday’s webinar, I discussed how gold gold’s recent action is exactly what to look for in a turn.
Gold
Hourly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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GBPUSD
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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FOREXAnalysis: From the 6/21 FX Technical Weekly – “Don’t lose sight of the big picture. A 4 year triangle (see next chart) was broken to the downside in February and price has returned to the breakout point. The GBPUSD completed an outside week. This is the first reversal from a 13 week price extreme since the week that ended 3/15 (low of the year so far). The GBPUSD is ahead of the EURUSD at this point. The GBPUSD topped in January…the EURUSD in February. The GBPUSD bottomed in March…the EURUSD in April. The GBPUSD made a high on 6/17 and the EURUSD made its high on 6/19. So it makes sense that the GBPUSD would fall apart before the EURUSD does. 5 waves down are visible from the high but when the GBPUSD turns, it tends to go quickly so beware of looking for a deep 2nd wave rally that never materializes.”
I got tripped up with the 7/3 outside day reversal but the market never followed through on that reversal (the reversal day was 7/3 and the market never traded above the 7/3 high). It’s not hyperbole to say that the GBPUSD has plummeted since. After 1.4830, the next big support isn’t until 1.4225/60.
FOREX Trading Strategy: In order to position for a larger breakdown, risk needs to be above the 7/3 high (1.5303). One way to make sure that you don’t sell too cheap is to use a 5 day moving average as a trigger point. 1.4960-1.5007 is also estimated resistance from Friday’s early morning low and 5/31 low. In summary, look for a weak bounce to position for the bigger breakdown.
USDJPY
Daily
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FOREXAnalysis: The USDJPY is nearing levels ripe for a sale. High volume areas are seen at 101.27 and 101.97. The 78.6% retracement of the decline from the high is 101.60. The underside of the November 2012-April 2013 trendline reinforces this area early next week as one to look for a top. It’s comforting that the SP 500 (see next chart) is at resistance defined by a trendline confluence (underside of 8 month trendline and line that connects the May and June tops).
FOREX Trading Strategy: Looking for a ‘tradeable’ top on Sunday / Monday.
SPX
Daily
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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— 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.