Analys från DailyFX
Price & Time: Godot Still A No Show
Talking Points
- Euro near key retracement level
- Gold closing in on 2013 low
- GBP/USD breaks important support near 1.6000
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD broke under the 12th square root relationship of the year’s high at 1.2585 to trade at its lowest level since August of 2012
- Our near-term trend bias is lower while below 1.2705
- The 78.6% retracement of the 2012/2014 range near 1.2455 looks to be the next important downside attraction in the rate
- A turn window of some importantance is eyed later this week
- A close over 1.2705 would turn us positive on the euro
USD/JPY Strategy: Like holding reduced long short positions while below 1.2705.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD has come under further pressure to trade within a few dollars of last year’s 1179 low
- Our near-term trend bias is lower in Gold while below 1235
- A close under 1179 is needed to set off a more important decline
- A minor turn window is eyed later this week
- A close over 1235 would turn us positive on the metal
XAU/USD Strategy: Square
Focus Chart of the Day: GBP/USD
Cable broke under key support near 1.6000 on Friday to trade to its lowest level since November of last year. The decline in Sterling since the Scottish referendum has caught many off guard as a relief rally was naturally expected. Most seem to attribute the weakness in the pair to the UK side of the equation and the notion that rate hikes there will be put off. I’m not sure I really buy that. For me the driver is the Greenback. With the political risk out of the way, GBP/USD has just become another European currency to sell against USD. The market is in love with the Buck at the moment – perhaps too much so if you pay any attention to historical extremes like sentiment, positioning (Commercials are the most short USD they have ever been), rate-of-change, etc. However, the market has been ignoring these historical red flags for well over a month and it was probably only a matter of time before Cable came under the crosshairs of the USD bull mafia. Should the mythical USD correction ever materialize, GBP/USD should be in good shape from a relative strength perspective as it has held up better than most other European currencies during the recent rout. Timing methods have been admittedly dreadful over the past month or so as USD has knifed through them all, but there is a decent convergence of timing relationships in the Pound around the second half of the week that point to some sort of reversal attempt around this time.
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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.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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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