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Price & Time: Are Pro-Risk Markets Overly Optimistic?

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Talking Points

  • EUR/USD inching towards next key support zone
  • Kiwi approaching important upside pivot
  • 1Q14 looks cyclically significant for the SP 500

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Foreign Exchange Price Time at a Glance:

Price Time Analysis: EUR/USD

PT_JAN_8_body_Picture_3.png, Price amp; Time: Are Pro-Risk Markets Overly Optimistic?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • EUR/USD has come under steady pressure since failing late last month at a long-term retracement near 1.3900
  • Our near-term trend bias is negative on the Euro while below 1.3800
  • The 3rd square root relationship of the 2013 high at 1.3540 remains the next significant downside attraction for the exchange rate
  • A minor cycle turn window is seen today and early next week
  • Only a daily close over last year’s closing high near 1.3800 would turn us positive on the Euro again

EUR/USD Strategy: Like the short side while below 1.3800.

Price Time Analysis: NZD/USD

PT_JAN_8_body_Picture_2.png, Price amp; Time: Are Pro-Risk Markets Overly Optimistic?

Charts Created using Marketscope – Prepared by Kristian Kerr

  • NZD/USD has moved steadily higher since finding support last week near the 4×1 Gann angle line of the 2012 closing high
  • Our near-term trend bias is higher while over .8185
  • Key resistance looks to be the 4th square root relationship of the 2013 high at .8305 with strength above needed to confirm the start of a more important move higher
  • A minor cycle turn window is seen today
  • A daily close below the 4th square root relationship of the October high at .8185 would turn us negative on the Kiwi

NZD/USD Strategy: Like the long side over .8185.

Focus Chart of the Day: SP 500

PT_JAN_8_body_Picture_1.png, Price amp; Time: Are Pro-Risk Markets Overly Optimistic?

A variety of long-term Gann and Fibonacci price relationships converge between 1815 and 1875 in the SP 500. Given several measurements of positive sentiment are now at extremes not seen in three decades; a top of some magnitude looks likely in the near future. Timing such things is obviously the difficult part. That said, the first quarter of 2014 looks particularly important for the index from a time cycle perspective with important turn windows seen during the last week of January, early February and the middle of March. Should the index be making new highs into these time periods we will become very suspicious and probably outright bearish. A multi-day close over 1875 risks some sort of blow off move higher, but this still looks like the less likely scenario.

To receive other reports from this author via e-mail, sign up toKristian’s e-mail distribution list via this link.

Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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.

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Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

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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

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British Pound Reversal Potential Persists Heading into New Quarter

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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

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