Analys från DailyFX
Price & Time: Cyclical Curveball in the Kiwi
Talking Points
- Kiwi enters into medium-term cycle turn window
- USD/JPY remains in consolidation mode
- GBP/USD pulls back from key Fibo
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Focus Chart of the Day: NZD/USD
The next couple of days are a clear medium-term cycle turn window in NZD/USD. Given the impressive 6 big figure plus rally in the Kiwi this month we had expected the window to lead to a top and indeed it may have. However, Tuesday’s early weakness has thrown us a bit of a curveball as there is now a chance the exchange rate peaked early or may even record a low. The 2nd square root progression of the recent high at .8250 is important in this regard as a close under this level would be clear evidence of an early change in trend.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY is in consolidation mode just above the 1×1 Gann angle line of the year’s high in the 98.70 area
- While above the 1×1 Gann angle line of the February low at 97.80 our near-term trend bias will remain higher
- The 4th square root progression of the year’s high at 99.65 is a clear near-term pivot with traction above needed to set up a push to attractions at 100.70 and above
- A very minor cycle turn window is seen later this week
- Weakness below 98.70 would dampen the positive tone, but only a move under 97.80 on a closing basis would turn us negative on the exchange rate
USD/JPY Strategy: Like the long side while over 97.80.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD failed last week near the 88.6% retracement of the year’s range near 1.6165.
- While above a key Gann confluence near 1.5895 our near-term trend bias will remain higher in Cable
- While the 1.6090 area is resistance, strength over 1.6165 is really neeeded to signal a resumption of the broader uptrend
- The middle of the week is a possible minor cycle turn window
- A daily close below 1.5895 would undermine the positive tone in the rate and turn us negative
GBP/USD Strategy: Like the long side whilst over 1.5895.
Price Time Analysis: SP 500
Charts Created using Marketscope – Prepared by Kristian Kerr
- SP 500 failed last week during a medium-term cycle turn window at a key Fibonacci projection level at 1735
- However, the close over 1710 has shifted our trend bias higher and while above 1675 it will remain positive
- The 1635 projection level is a natural upside pivot with traction above needed to signal a trend continuation
- A minor cycle turn window is seen over the second half of the week
- A daily close below 1675 would suggest a more important reversal has occurred in the SP 500
SP 500 Strategy: Like buying into weakness over the next couple of days.
— 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
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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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