Analys från DailyFX
Price & Time: Big High in ’Risk’ or Just More of the Same?
Talking Points
- Important timing surrounds recent extremes in the SP 500, big move coming?
- Important top in EUR/USD?
- Gold nearing key support, reaction there should be very telling
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
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 pressure over the past couple of days following last week’s failed attemp to overcome key Fibonacci resistance at 1.3970
- Our near-term trend bias is lower in the Euro while below 1.3930
- The 2nd square root relationship of the year’s high at 1.3730 remains a key downside support
- A cycle turn window is seen next week
- Only aggressive strength back over the year’s closing high at 1.3930 would turn us positive again on the Euro
EUR/USD Strategy: Look to sell the Euro into strength.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD reversed sharply during a key cycle turn window at the start of the week from just above the 6th square root relationship of the 2013 low
- Our near-term trend bias is now lower in the metal following the breach of support near 1350
- A convergence of various Fibonacci and Gann levels between 1310/18 makes this a critical support with traction below needed to confirm that a more important move lower is unfolding
- A minor cycle turn window is seen around the middle of the week
- A daily close back over 1380 would turn us positive on the metal
XAU/USD Strategy: We like selling on strength over the next few days against 1380.
Focus Chart of the Day: SP 500
The SP 500 is at an important inflection point. The high on March 7th just shy of 1890 had strong timing as it fell on the 5-year anniversary window of the 2009 low. Anniversaries are always potentially important for students of Gann as reversals in trend seem to be more prevalent around them. The 60-month and a day duration of the move higher is an eerie mirror image of the last bull cycle which started on October 10, 2002 and ended on October 11, 2007. A possible measured move in time. The high at the beginning of the month also has strong price symmetry as from low to high the SPX has rallied 182% (rounding down). This is 3.14 (Pi) times the 2007-2009 decline of 58%. Confusing the picture is the price action from Monday as the index reversed sharply from 1830 during a “Pi cycle” turn window (8.6 months x 7) related to the 2009 low. Is the move higher over the past few days a resumption of the trend or just a re-test of the high before heading lower again? With strong timing at both extremes all we can do is observe and await a clear break for a directional signal.
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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
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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