Analys från DailyFX
Price & Time: In Search of the Next Cyclical Stopping Point in USD/JPY
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.
Foreign Exchange Price Time at a Glance:
USD/JPY:
Charts Created using Marketscope – Prepared by Kristian Kerr
-The USD/JPY uptrend has stalled over the past few days at the 102.65 200% extension of the late April decline
–Our bias remains higher in the exchange rate, but traction over the 102.65 level is now needed to pivot the market higher towards 103.15 and above
-Some scope for a minor cycle high today, but next longer-term cycle turn window is not until month-end (See Focus Chart of the Day)
-Minor Gann support seen in the 101.40 area
-However, only aggressive weakness below a confluence of several short-term retracements and extensions in the 100.50/80 area would turn us negative on the dollar
Strategy: Long positions favored whilst over 100.50
GBP/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–GBP/USD has come under aggressive downside pressure since hitting time and price resistance last week around 1.5580
-Our bias is lower in Cable with the 9th square root progression of the year-to-date high at 1.5195 now looking like a clear downside pivot to further weakness
-However, near-term focused cycles favor strength for a couple more days
-The 1×4 Gann angle line from the month-to-date high in the 1.5305 area is immediate resistance
-Only aggressive strength back over the 2nd square root progression of the May high at 1.5355 would shift our bias to positive in the pound
Strategy: Short postions favored in Cable whilst below 1.5355
NZD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–NZD/USD mas come under further pressure over the past few days and recorded a new year-to-date low on Friday
–Out bias is still negative towards the Kiwi with focus now on the .8075 161.8% projection of the mid-April move lower as measured from the late April high
-This level could act as a strong support and a close below is required to maintain the immediate downside tack
-A medium-term cyclical turn window is in effect around the middle of next week
-Gann resistance seen at .8215 with a close above this level required to alter the negative technical tone in the Bird
Strategy: Like short positions whilst below .8215.
Focus Chart of the Day: USD/JPY
Negative sentiment towards the yen continues to be a major cause of concern for us. The extreme readings in various surveys of late have historically led to position washouts of some magnitude. However, as we pointed out on Wednesday the pair recently took out important time resistance that argues for a further advance. Looking at various cycles the next turn window or time resistance of significance looks to be around month-end as this will be an idealized 8.6 month Pi cycle from the key low recorded last September. If the exchange rate continues higher into this timeframe this looks to be a natural stopping point and a counter-trend move of some importance could develop there. We will write more on this as it unfolds.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
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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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