Analys från DailyFX
Price & Time: Keeping a Close Eye on the Euro
Talking Points
- Euro enters into final day of medium-term cycle turn window
- USD/CHF rebounds ahead of key support
- Gold nearing important resistance zone
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Focus Chart of the Day: EUR/USD
Today is the final day of a medium-term cycle turn window in EUR/USD. We have been looking for a correction to materialize given the clear and somewhat extended trend leading into it. So far this has proven rather illusive, but a clear failure today at key resistance between 1.3830/95 could quickly change things. The 1.3740 area looks like a near-term pivot with weakness below needed to confirm that a minor top is in place. Continued strength in the Euro into the middle of the week would invalidate the cycle window. The next cyclical window of importance looks to be around the middle of November.
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 middle of a multi-month contracting range
- Our near-term trend bias is positive on the exchange rate while above the 7th square root progression of the year’s high at 96.60
- The 5th square root progression of the year’s high at 98.60 is resistance, but a move through 99.65 is really needed to inspire a more important push higher
- A Fibonacci time cycle suggests the rate is vulnerable to a break from the contracting range over the next few days
- A daily close under 96.60 would turn us negative on the exchange rate
USD/JPY Strategy: Square until we get more clarity.
Price Time Analysis: USD/CHF
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF traded to it lowest levels in over two years last week before finding support just ahead of a critical Fibonacci and Gann confluence in the .8840/70 area
- Our near-term trend bias remains negative on USD/CHF while below the 10th square root progression of the 2012 high at .8975
- However, a daily close under .8840 is really needed to signal a resumption of the broader decline
- Today is the final day of a medium-term cycle turn window
- A move over .8975 especially on a daily close basis would warn that a more important correction higher is unfolding
USD/CHF Strategy: Took partial profit heading into the current turn window in USD/CHF. Like holding the reduced short position as long as .8975 holds.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD has moved steadily higher since reversing during the cycle turn window around the middle of the month
- Our near-term trend bias is higher in the metal while above the 1×1 Gann angle line of the year’s closing low at 1275
- The 2nd square root progression of the August high at 1357 is immediate resistance, but the 1×1 Gann angle line near 1375 looks like the next important upside attraction/reaction zone
- A minor cycle turn window is seen around the middle of the week
- A daily close below 1275 would turn us negative on the metal
XAU/USD Strategy: Like the long side while over 1275.
— 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
Looking for a way to pinpoint sentiment extremes in real time? Try the Speculative Sentiment Index.
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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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