Analys från DailyFX
Price & Time: Key Levels to Watch Around the Event Risk
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:
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD touched its lowest levels in a month on Wednesday before rebounding sharply off the 78.6% retracement of the May to June advance at 1.2925
- While below 1.3125 our trend bias remains lower in the Euro
- A close below 1.2925 is now needed to signal a broader downside resumption
- Medium-term focused cycle studies point to the first half of next week as a turn window, but shorter-term counts look positive for another couple of days
- The 3rd square root progression of last month’s high at 1.3065 is more immediate resistance, but only traction over 1.3125 turns us positive on the single currency
Strategy: Like holding short positions while below 1.3125
GBP/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
- GBP/USD reversed sharply higher on Wednesday from just below 1.5165 78.6% retracement of the May to June advance, but the advance was short-lived
- While below the 2nd square root progression of Wednesday’s low near 1.5375 our trend bias is lower
- Medium-term cycles studies point to next week as a somewhat important turn window
- The 1.5090 level is now a key downiside pivot with a close below needed to confirm a downside resumption
- Only a close over 1.5375 alters the immediate negative outlook and turns us positive on the Pound
Strategy: Short positions favored while below 1.5375.
USD/CHF:
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF traded to its highest level in a month on Tuesday before finding resistance just ahead of a key Gann convergence near .9540
- Our trend bias is higher in USD/CHF while above .9335
- Traction over .9540 now needed to signal a broader upside resumption
- Very near-term focused cycles favor another day or so of weakness before attempting to resume higher into next week
- A close over .9335 will turn us negative on the exchange rate
Strategy: Long positions favored while above .9335
Focus Chart of the Day: FXCM Dollar Index
It is a holiday in the United States, but other markets are open. This always poses problems for technical analysts that focus heavily on the x-axis of time like myself. The medium-term picture looks relatively clear with several cyclical techniques pointing to a USD peak of some sort materializing sometime next week. The short-term picture, however, is a bit muddled with the holiday. Why? Because we are unsure as to whether we should count Thursday as a full trading day or not. If it is a full trading day, it pulls the USD turn window we are anticipating back to the first part of the week. If it is not it pushes the turn window out more towards the middle of the week. The hourly charts should help to clear up the cyclical picture over the next few sessions. Given the slew of big event risks over the next 24 hours we are leaning to counting it as a full day.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
Looking for a way to pinpoint sentiment extremes in the Euro 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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