Analys från DailyFX
Price & Time: Euro Touches Highest Level Since October 2011
Talking Points
- EUR/USD punches through key resistance to trade at multi-year high
- USD/JPY overcomes key Gann level
- Caution required in USD/CHF early next week
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 traded at its highest levels in almost 2 and a half years on Friday
- Our near-term trend bias is higher in the Euro while over 1.3730
- A move over the 50% retracement of the 2008/2010 decline and the 1.618% projection of the 1Q13 decline between 1.3955/70 would be further evidence of a more important break
- A minor cycle turn window is seen around the middle of next week
- Only a daily close below 1.3730 would turn us negative on the Euro
EUR/USD Strategy: Look to buy on weakness while 1.3730 holds.
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY finally broke above the 2nd square root relationship of the year’s low at 102.75 on Thursday to trade at its highest level in over a month
- Our near-term trend bias is positive in the exchange rate while above 101.35
- The 1×1 Gann angle line from the year’s high at 103.15 is clear resistance and a move over this level is needed to set off another leg higher
- Early next week is a minor cycle turn window
- A close under the 4th square root relationship of the year’s high at 101.35 would turn us negative on the exchange rate
USD/JPY Strategy: Like the long side while over 101.35.
Focus Chart of the Day: USD/CHF
USD/CHF has come under renewed pressure over the past 24 hours to trade at its lowest level in almost two and a half years. Sentiment, not surprisingly, has turned rather negative on the exchange rate and most are now eyeing a deeper and immediate decline. February US non-farm payrolls could obviously prompt further losses, but we are cautious on the rate heading into next week as an important cycle turn window related to the August 2011 low is seen on Monday/Tuesday. We suspect this could slow the decline and possibly even reverse it. Key support levels to watch for a reaction are .8745, .8700 and .8665/80. Continued weakness (new yearly lows) after Tuesday would be very negative and further confirm the strength of the downtrend. Such a scenario would likely see weakness persist into the latter part of the month.
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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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