Analys från DailyFX
Price & Time: Calm Before the FX Storm?
- SP 500 leaves potentially important divergence
- GBP/USD encounters Gann resistance in the 1.5960 area
- USD/JPY holds a key support
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY has come under steady downside pressure since failing last week near the 3rd square root progression of the year’s high in the 100.65 area
- Our near-term trend bias is higher in the exchange rate and will remain so while above the 50% retracement of the May to June decline in the 98.75 area
- The 61.8% retracement of July to August decline near 99.55 is an interim pivot, but only traction over 100.65 signals a more important upside resumption
- The second half of the week is a cycle turn window
- A close under 98.75 would turn us negative on the exchange rate
USD/JPY Strategy: Like the long side against a 98.75 close.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD broke above the 1×3 Gann angle line of the year-to-date high to trade to its highest levels since mid-January on Monday
- Our near-term trend bias remains higher in Cable while above 1.5755
- The 3rd square root progression of the year’s high at 1.5960 has so far capped and a close over this level is needed to maintain the immediate upside tack
- The first half of next week is a possible medium-term turn window
- A loss of the 1.5755 area on a closing basis would undermine the immediate postive tone in the pound and turn us negative
GBP/USD Strategy: Like the long side while over 1.5755.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has come under steady pressure since failing early in the month at the 1×3 Gann angle line of the 2012 closing low in the 1.05550 area
- Our near-term trend bias remains lower in Funds while below the 50% retracement of the July range in the 1.0430 area
- The 3rd square root progression of the year’s high near 1.0300 is an important pivot with a close below required to set off the next leg lower in the rate
- The first half of next week is a potential medium-term turn window
- The 2×1 Gann angle line of the 2012 low at 1.0340 is immediate resistance, but only a close over 1.0430 would turn us positive on the rate
USD/CAD Strategy: Like holding short positions while below 1.0430.
Focus Chart of the Day: SP 500
The early August timeframe in the SP 500 was extremely significant for us from a cyclical perspective. We have maintained that the high recorded during this time could lead to a more serious decline over the traditionally negative September/October period. On Monday, both the futures and fair value contracts of the SP 500 traded to new all-time highs in the overnight session. However, by the time the cash market opened these derivatives were off the highs and cash never managed to trade above its all-time high of 1710. This has left a glaring divergence on the daily charts and one that is sometimes seen around important re-test/double tops. A close over 1710 in SPX cash is needed to alleviate this potential technical negative and clear the path for a more important move higher in the index. Weakness below 1670 would greatly increase our concern that a top of importance is materializing.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in SPX in real time? Try the Speculative Sentiment Index.
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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