Analys från DailyFX
Price & Time: In Search of the Opening Range Breakout in USD/JPY
Talking Points
- USD/JPY bounces sharply, but still vulnerable
- EUR/USD stalls near minor retracement
- Gold closes above important Gann level
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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 has been in recovery mode since finding support last week just ahead of the 3rd square root relationship of the 2013 high at 1.3540
- Our near-term trend bias is lower in the Euro while below 1.3800
- The 1.3540 area remains a critical near-term pivot with weakness below this level needed soon to prompt a continuation of the downtrend
- The latter half of next week looks to be the next important cycle turn window
- Only a close over 1.3800 would turn us positive on the Euro
EUR/USD Strategy: Like selling into strength while below 1.3800.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD closed over the 1247 2nd square root relationship of the 2013 low on Monday
- Our near-term trend bias is now higher in the metal
- The 88.6% retracement of the December range at 1257 is immediate resistance and traction above is needed to further confirm the importance of Monday’s break and set up further upside
- Caution is required as a cycle turn window is seen over the day or so
- Only aggressive weakness below the 1st square root relationship of the 2013 low at 1213 would turn us negative on Gold
XAU/USD Strategy: Like being square for a few more days.
Focus Chart of the Day: USD/JPY
Some wild price over the past couple of days (for a low vol environment) in the Yen and the Nikkei. Whipsaw is often the name of the game in January as yearly institutional PLs are re-set at the start of the month. There is understandably a lot of angst around this time as money managers big and small don’t want to miss out on the first “clear” directional move of the year and start off lagging their respective benchmarks. The psychology in the first month of the calendar year is not unlike the psychology we used to witness in pit traded markets at the open when there would be a few false starts in the first hour of trading leaving a defined range. The break of this range or what market veterans would refer to as an “opening range breakout” would usually lead to the first real directional move of the day. The year’s opening range in USD/JPY after yesterday’s reversal looks set at 105.43 on the topside and 102.84 on the low end. A break of one should prompt that much sought after first “clear” directional move of 2014. We still favor lower given the rate’s double failure at important long-term retracement resistance near 105.50.
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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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