Analys från DailyFX
Price & Time: Gold Leading the Way for Currencies?
Talking Points
- Persistent weakness in metal warns period of general USD strength nearing
- USD/JPY volatility compression points to looming trend move
- USD/CAD turns at key Fibonacci level
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY continues to meander around the 3rd square root relationship of the year’s high at 102.35
- Our near-term trend bias is higher in the exchange rate while over 101.35
- The 1×1 Gann angle line of the year’s high near 102.50 is immediate resistance, but a move through the 2nd square root relationship of the year’s low at 102.75 is needed to re-instill positive momentum
- A minor cycle turn window is seen today
- A move under 101.35 would turn us immediately negative on USD/JPY
USD/JPY Strategy: We like the long side while over 101.35.
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD reversed last week from the 200% extension of the 2H12 range in the 1.1260 area
- Our near-term trend remains higher in Funds while over the 2nd square root relationship of the year’s high at 1.1065
- Immediate resistance is seen at 1.1170, but a move through 1.1260 is really required to signal a resumption of the broader uptrend
- A very minor cycle turn window is seen tomorrow
- A daily close under 1.1065 would turn us negative on Funds
USD/CAD Strategy: We like the long side while over 1.1065.
Focus Chart of the Day: GOLD
Gold has come under steady pressure since recording a high just shy of 1392 during a key cycle turn window (8.6 months from 1H13 low) last week. The ease at which the metal broke through the 2nd square root relationship of the YTD high at 1318 on Monday keeps focus lower with the 50% retracement of the December/March range at 1285 now at risk. With an important cycle turn window for USD expected later in the week we can help but wonder if the general weakness being exhibited in the metal is a leading indicator for a period of general dollar strength against the currencies in the weeks ahead? The price action over the next days should answer this question. As for Gold, the next important metal specific cycle turn window is seen around April 4-9. Only unexpected aggressive strength above 1360 would signal the uptrend has resumed ahead of schedule.
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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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