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Price & Time: Equity Markets at a Key Juncture

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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.

Foreign Exchange Price Time at a Glance:

USD/JPY:

PT_equities_body_Picture_4.png, Price amp; Time: Equity Markets at a Key Juncture

Charts Created using Marketscope – Prepared by Kristian Kerr

USD/JPY failed again at the start of the week at the 50% retracement of the 2007 to 2011 decline in the 99.80 area

Subsequent weakness below a convergence of different Gann levels in the 98.30/50 area has shifted our bias lower in the exchange rate

-Focus now on the 50% retracement of the late April advance in the 97.80 area with weakness below there needed to confirm the integrity of the current decline

-A Gann related time cycle turn window is in effect over the next few days

-Strength over a Gann level at 99.30 required to turn us positive on the rate, but a move over 100.00 is really needed to signal the start of a more important push higher

Strategy: Want to see this cycle turn window play out for a few more days before positioning.

AUD/USD:

PT_equities_body_Picture_3.png, Price amp; Time: Equity Markets at a Key Juncture

Charts Created using Marketscope – Prepared by Kristian Kerr

AUD/USD found support on Tuesday near the 1×1 Gann angle line drawn from the year-to-date closing high

-Strength from this level has been unimpressive so far with a Gann confluence near 1.0325 capping over the past couple of days

-Our bias remains lower in the exchange rate, but weakness under a Gann confluence in the 1.0215 area needed to trigger a more important decline

-Near-term cycles are a bit muddled, but a minor turn window is seen around the middle of the week

-The 38% retracement of the late April decline is now key resistance and only strenth over this level turns us positive on the Aussie.

Strategy: Still like selling on strength.

EUR/CHF:

PT_equities_body_Picture_2.png, Price amp; Time: Equity Markets at a Key Juncture

Charts Created using Marketscope – Prepared by Kristian Kerr

EUR/CHF traded to its highest levels since mid-March on Thursday before finding strong resistance at the 50% retracement of the January to February decline in the 1.2350 area

Our bias is still higher in the cross, but a break over 1.2350 is needed soon to maintain confidence in the prospects of a further upside push

-Short-term cyclical studies still look positive for another couple of days

-A convergence of the 3rd square root progression from the year-to-date high and the 61.8% retracement of the late February to early March advance in the 1.2220/30 area is key support

-Weakness below this support zone will turn us negative on the cross

Strategy: Like buying on weakness against 1.2230/20 over the next couple of days.

Focus Chart of the Day: SP 500

PT_equities_body_Picture_1.png, Price amp; Time: Equity Markets at a Key Juncture

We have been very vocal about the importance of the next few days for the FX markets, but it looks like it will be a very significant time period for the equity markets as well. A slew of various geometric, Fibonacci and Gann relationships related to some key swing points in the indices going as far back as 1987 are all set to converge in the week ahead. A push to (or even near) new all-time highs in the indices during this time would actually be a major negative from a cyclical perspective and set the stage for a top of some importance. We must admit that there is a chance that this window could somehow morph into a low, but given the ebullient sentiment being exhibited toward equities at the moment and the sheer multitude of cycles converging in the days ahead such a scenario looks highly unlikely in our view. On the upside key resistance levels in the SP 500 look to be 1595, 1610 and 1618. Weakness below 1530 would be strong evidence that an important move lower has begun.

Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

Need guidance managing risk on trades? Download the free Risk Management Indicator.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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.

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Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

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

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

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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