Analys från DailyFX
Price & Time: Important Break Looming
Talking Points
- The “forgotten” commodity currency is closing in on a major pivot
- USD/JPY closes in on key Gann level
- GBP/USD fails to record a new high close for the year by a fraction of a pip
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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 closed right on the 1st square root relationship of the year’s low at 101.75 yesterday
- Our near-term trend bias is now negative on the exchange rate
- Focus is now on the 4th square root relationship of the year’s high at 101.35 with a daily close below needed to confirm the start of a more powerful decline
- A minor cycle turn window is eyed towards the end of the week
- A move back over 103.75 would turn us positive on the exchange rate
USD/JPY Strategy: We like selling into strength against 103.75.
Price Time Analysis: GBP/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD moved through the 61.8% retracement of the February/March decline at 1.6685 on Tuesday and failed to achieve a new high close for the year by a fraction of a pip
- Our near-term trend bias is now higher in Cable
- The March high at 1.6785 is key resistance with a move over this level needed to prolong the advance
- An important turn window is seen around the middle of next week
- Only weakness below the 2nd square root relationship of the year’s high at 1.6560 would turn us negative on the Pound
GBP/USD Strategy: We like buying into any weakness over the next couple of days.
Focus Chart of the Day: USD/CAD
The low in USD/CAD at 1.0909 on February 19th was significant from a cyclical perspective as a whole host of relationships converged there. The market reaction from this turn window confirmed the importance of the timing as the exchange rate turned practically on a dime and traded to a new multi-year high over 1.1250 by late March. The story since then is much different as Funds has lost over 3 big figures and is knocking on the door of a break of 1.0909. Most chartists can see 1.0909 is a significant pivot, but for us a breach of this level will be even more important as in the longer-term scheme of things it will remove a major timing element of the bullish case we had been building for USD/CAD. In the near-term, a fairly important turn window is seen around the middle of next week. Some kind of low is expected around this time. We like holding shorts until then provided 1.1010 continues to cap.
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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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