Analys från DailyFX
Price & Time: Key Levels to Focus On Around the Employment Data
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.
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Foreign Exchange Price Time at a Glance:
USD/JPY:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY is consolidation mode below the 7th square root progression of the last month’s low in the 100.65 area
- Our trend bias remains higher while above a key Gann convergence in the 98.50/70 area
- A clear break of 100.65 is now required to set up the next significant move higher
- However, a medium-term cycle turn window is seen between Tuesday and Thursday of next week
- The 38% retracement of the April to May advance at 99.45 is immediate support, but only aggressive weakness below 98.50 would turn us negative on the dollar
Strategy: Like holding long positions in USD/JPY while above 98.50.
USD/CAD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD continues to meander around key the 100% projection of January to March advance in the 1.0540 area
- So far Funds has been unable to gain any traction above this level and a close over 1.0540 is needed to signal the start of a renwed push higher
- Medium-term cycles studies point to early next week as a possible turn window in the exchange rate
- The 78.6% retracement of the 2011 to 2012 decline near 1.0445 is now immediate support
- However, only a close below 1.0370 would alter the near-term positive structure and turn us negative
Strategy: Like holding long positions while above 1.0370.
Gold:
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD continues to consolidate just above the 1×3 Gann angle line of the October high in the 1229 area
- While below key long-term retracement support turned resistance at 1301 our trend bias has to remain lower in the metal
- Weakness back under 1180 is needed to signal a downside resumption
- A very minor cycle turn window is seen early next week
- Only aggressive strength over 1301 undermines the negative outlook and turns us positive on the metal
Strategy: Reduced short positions favored while below 1301
Focus Chart of the Day: SP 500
The SP 500 has reacted very well since reversing near key symmetry at 1565 during the major cycle turn window late last month. With another major turn window fast approaching during the latter half of July, how the index reacts at key resistance around 1640 will likely determine whether the index attempts to peak at that time or not. Traction over 1640 should prompt some sort of re-test of the May high, but also sets up a potentially broader top during the late July turn window. On the other hand, a failure over the next few days near 1640 sets up a potential higher low during the key late July time period. However, such a development would be perversely longer-term bullish for the index.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the SPX 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
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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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