Analys från DailyFX
Price & Time: Big Day for USD/JPY
Talking Points
- USD/JPY closing in on important upside test
- EUR/USD slows decline
- SP 500 grinding through important long-term resistance
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD has come under steady downside pressure since failing late last year at a key long-term retracement near 1.3900
- Our near-term trend bias is lower in the Euro while below the 2013 closing high at 1.3800
- The 3rd square root relationship of the 2013 absolute high at 1.3540 is in important downside pivot with weakness below needed to confirm another leg lower in the rate
- Minor cycle turn windows are seen early and late next week
- The 1.3655 area is interim resistance, but only over 1.3800 on a daily close basis turns us positive on the Euro
EUR/USD Strategy: Favor the short side while below 1.3800
Price Time Analysis: SP 500
Charts Created using Marketscope – Prepared by Kristian Kerr
- SP 500 remains in very persistent uptrend
- Our near-term trend bias is higher while above 1823
- A variety of long-term Fibonacci and Gann price relatinships overhead at 1865 and 1875 look like the next critical resistance zone and potential point of failure
- A cycle turn window is seen around the end of the month
- A daily close below 1823 would warn that the index has peaked ahead of schedule and woud turn us negative
SP 500 Strategy: Like the long side while over 1823
Focus Chart of the Day: USD/JPY
US employment data will be released this morning. This is an important day for the FX markets where big levels often get tested. In the aftermath of the data today we will be paying close attention to USD/JPY as spot is very near the 61.8% retracement of the 2007 to 2011 decline at 105.55. How the rate reacts around this important resistance should shed light on the next important directional move in USD/JPY. We have been wary of recent strength in the rate as positive sentiment remains stubbornly high and near historical extremes. This is a potential problem for the rate, but up to now it has held all the right support levels and hasn’t really done anything to warrant fighting what is clearly a very strong uptrend. This could (and we emphasize could) change today with some sort of price action failure around 105.50. A clear push through 105.50 on a daily close basis, on the other hand, probably sets up another leg higher. This week’s low at 103.90 is now critical support for USD/JPY as a move below there will trigger a host of different “topping patterns” used in classical technical analysis.
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— 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
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.
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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