Analys från DailyFX
Price & Time: Don’t be Fooled by the "Inactivity" in USD/JPY
Talking Points
- EUR/USD nearing important resistance zone
- Cycle turn window coming up in GBP/USD
- Important couple of days for the Yen
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 remains in consolidation mode below the 1st square root relationship of the 2013 high at 1.3775
- Our near-term trend bias is higher in the Euro while above 1.3685
- Traction above 1.3775 is needed to set up a more important advance
- An important cycle turn window is seen over the next couple of days
- A daily close below 1.3685 would turn us negative on the exchange rate
EUR/USD Strategy: Square for the moment. Want to see how the rate reacts into the cycle turn window.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD found support yesterday from just below the 38% retracement of the month-to-date range at 1.6605
- Our near-term trend bias is positive on Cable while over the 2nd square root relationship of the year’s high at 1.6560
- Interim resistance is seen around 1.6730, but a move through the 127% extension of the Jan/Feb decline at 1.6780 is needed to confirm a broader upside resumption in the rate
- A cycle turn window is seen on Wed/Thurs
- Weakness below 1.6560 would turn our outlook negative on the Pound
GBP/USD Strategy: Like the long side while over 1.6615.
Focus Chart of the Day: USD/JPY
The price action in USD/JPY over the past couple of weeks has been uninspired to say the least. The 2nd square root relationship of the year’s low at 102.75 has been formidable resistance so far keeping rally attempts well contained. The next couple of days look important for USD/JPY from a short-term cyclical perspective and we should learn a lot more about where the rate stands in the bigger picture scheme of things. A high during this time (perhaps even briefly above 102.75) followed by a turn lower under 101.35 would suggest to us that the decline that started in USD/JPY at the start of the year is resuming. Given the narrowing range on the daily chart such a move would likely be swift and aggressive. The more positive scenario requires that USD/JPY gain traction over 102.75 and hold over this level into late on Thursday. Such an occurrence would likely lead to an important move higher as the rate plays “catch up” with other pro-risk markets. We slightly favor the former at the moment.
— 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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