Analys från DailyFX
Price & Time: GBP/USD Under Pressure
Talking Points
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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 has come under renewed 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 traction over 103.75 is really needed to signal that a new move higher of importance is unfolding
- A minor cycle turn window is seen today
- 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: USD/CHF
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF has come under renewed pressure on Wednesday
- Our near-term trend bias is lower in USD/CHF while below .8910
- Immediate support is seen at .8445 ahead of the 127% extension of the Dec/Jan advance at .8700
- A cycle turn window is see later next week
- Only aggressive strength back over the 38% retracement of the year-to-date range at .8910 would turn us positive on the exchange rate
USD/CHF Strategy: Look to sell on strength while below .8910.
Focus Chart of the Day: GBP/USD
It is do or die for Cable over the next day or so, at least from a short-term cyclical perspective. As mentioned in yesterday’s weekly outlook webinar the middle of the week is a potential turn window in GBP/USD. If the price action over the last few weeks has only been a consolidation within a broader uptrend then time wise this is where the market should try to turn up. Price wise, this morning the exchange rate cracked the 38% retracement of the February range near 1.6600. This is clearly a negative development, but we view the 2nd square root relationship of the year’s high at 1.6560 as the critical “line in the sand”. If the more positive scenario is to unfold then this is the level that needs to hold (on a closing basis). A clear breach of 1.6560 likely opens the way for a deeper decline into an important turn window seen around the end of the month. On the upside, a move back through 1.6635 is needed to relieve immediate downside pressure and suggest a turn is indeed underway.
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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
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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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