Analys från DailyFX
Price & Time: Commodity Currencies Nearing Important Cyclical Inflections
Talking Points
- EUR/USD fails near key retracement
- AUD/USD closing in on important resistance
- Long-term cycle turn window seen next week in USD/CAD
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 tested the 50% retracement of the December to February decline near 1.3685 before failing
- Our near-term trend bias is lower in the Euro while below the 2ndsquare root relationship of the year-to-date low near 1.3710
- A confluence of Gann levels near 1.3525/40 is an important near-term pivot , but weakness under 1.3500 is really needed to signal a resumption of the broader decline
- A cycle turn window is seen early next week
- A daily close over 1.3710 would turn us positive on the Euro
EUR/USD Strategy: We like the short side while 1.3710 holds.
Price Time Analysis: AUD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- AUD/USD has moved steadily higher since finding support late last month near the 78.6% retracement of the 2010/2011 advance in the .8700 area
- Our near-term trend bias is higher in the Aussie while over the 2nd square root relationship of the year-to-date low at .8845
- The 38% retracement of the October to January decline near .9080 is important resistance that needs to be overcome to increase the odds that this advance is more than just a minor correction
- The middle of next week is the next important cycle turn window
- Only a daily close below .8845 would turn us negative on the Aussie
AUD/USD Strategy: Like the long side for at least a few more days.
Focus Chart of the Day: USD/CAD
The second half of next week is a long-term cycle turn window related to the 2012 low in USD/CAD. This should influence the exchange rate. The big question now is determining in which direction the reversal will be? When we first mentioned the turn date about a month ago we thought it would lead to a high (and it still can), but the persistent weakness over the past couple of weeks certainly increases the odds for a cycle inversion (low) especially if weakness continues for another week or so. This is basically just a roundabout way of saying that we will be looking to fade whatever trend materializes over the next few days. Until then we can really just observe.
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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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