Analys från DailyFX
Price & Time: EUR/USD on the Cusp of a Big Break
Talking Points
- EUR/USD closing in on key price zone, stronger move coming?
- USD/JPY remains under pressure, but key support level approaching
- GBP/USD bounces sharply off important support area, uptrend resuming?
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY remains under pressure following last week’s failure at the 3rd square root relationship of the year’s high near 103.75
- Our near-term trend bias remains positive in the rate while above 101.35
- Interim resistance is seen around 103.40, but a move through 103.75 is really required to signal that a new move higher of importance is unfolding
- A medium-term turn window is seen later next week
- A close under 101.35 would turn us negative on USD/JPY
USD/JPY Strategy: Like the long side while 101.35 holds.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD fell to its lowest level in a month yesterday before reversing from just above the 2nd square root relationship of the year’s high at 1.6560
- Our near-term trend bias is higher in Cable while above 1.6560
- The 1.6740 area is an important upside pivot with a daily close over this level needed to signal a broader upside resumption
- A cycle turn window is seen here
- Only weakness back below 1.6560 would turn us negative on the exchange rate
GBP/USD Strategy: Like the long side while over 1.6560.
Focus Chart of the Day: EUR/USD
EUR/USD has punched through to new multi-year highs this morning. While the price action of the past few days has been impressive, the single currency still has a bit of work to do before signaling the “all clear” for a more important run higher. We say that because of the chart above. It is a monthly. It shows a nice convergence of several key retracement levels from the 2008, 2009 and 2011 peaks between 1.3830 to about 1.3975. A daily settlement above 1.3970 would confirm a break of the zone and set up and eventual move towards the next confluence area up around 1.4300. From a cyclical standpoint, we don’t really see anything meaningful in the way of “time resistance” until about the second half of next week. What does concern us is sentiment. The Daily Sentiment Index (DSI) has been showing around 85% bulls over the past few days so optimism is getting a bit too one way for our liking. However, it won’t become a real concern until it gets into the low 90’s. Ideally this would occur later next week into the turn window. A daily close back under 1.3830 before breaking above 1.3970 (or very soon after) would be a negative development for EUR/USD.
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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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