Analys från DailyFX
Price & Time: Cyclical Storm Coming
Talking Points
- EUR/USD probing key long-term resistance zone
- USD/CAD closing in on big resistance
- Important time for stocks ahead
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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 traded at its highest level since late 2011 on Friday
- Our near-term trend bias is positive in the Euro while over the 50% retracement of the February/March range near 1.3695
- Interim resistance is seen around 1.3900, but traction over 1.3970 is really needed to confirm that a more important move higher is underway
- A turn window is seen next week
- A close under 1.3695 would turn us negative on the Euro
EUR/USD Strategy: Look to buy on weakness while 1.3695 holds.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD closed below the 2nd square root relationship of the year’s high at 1.1010 late last week before turning sharply higher
- Our near-term trend bias is higher in Funds while over 1.0955
- Immediate resistance is seen at 1.1160, but strength over 1.1220 is required to signal that a more important leg higher is unfolding
- The latter part of this week is a cycle turn window
- Only a daily close below 1.0955 would turn us negative on USD/CAD
USD/CAD Strategy: Look to buy on weakness against 1.0955.
Focus Chart of the Day: SP 500
A quick glance at the chart of just about any US equity index will show some very powerful and seemingly healthy uptrends. Below the surface we see vulnerability. The month of March is historically one of the most important for the stock market as some major cyclical tops and bottoms have occurred during this month over the years ( most recently 2000, 2009 and the secondary low in 2002). On this basis alone our interest perks up, but this year is looking especially significant given the multitude of cyclical relationships we see converging in the next few days. Starting this Friday and continuing into about the middle of next week various long-term Pi, Fibonacci and other harmonics should begin to influence. Paradoxically, new highs (or near new highs) in the indices heading into this time period would actually be very negative and sets the stage for a potentially important reversal. In the SP 500, the 1890 level and the 1915/20 area look like key resistance heading into this timeframe. Strength in stocks (new highs) after the middle of next week or an inversion low over the next few days would obviously change the narrative. Such occurrences would signal to us that the indices have weathered the “cyclical storm” and are headed generally higher into the 3rd quarter.
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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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