Analys från DailyFX
Price & Time: Levels in the Euro We Are Watching For Direction After the ECB
Talking Points
- EUR/USD rebounds just shy of key support
- USD/JPY closing in on long-term retracement
- Gold fails at important Gann level
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY has moved steadily higher since finding support at a Gann angle line related to the 2011 low at the start of the week
- Our near-term trend bias is positive in USD/JPY while above 103.35
- A long-term retracement at 105.55 is an important upside attraction and potential point of failure that needs to be overcome shortly if the rate is to embark on a more meaningful move higher
- A very minor cycle turn window is seen Friday
- Only a daily close below the 2nd square root relationship of the year-to-date high at 103.35 would turn us negative on the rate
USD/JPY Strategy: Like the long side over 103.35
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD has moved steadily higher since finding support at the end of last year near the 161.8% extension of the October advance at 1183
- However, our near-term trend bias is lower while below a key Gann convergence at 1243/47
- The 1206 area is interim support, but weakness under 1183 is really needed to confirm a resumption of the broader decline
- A minor cycle turn window is seen today
- A daily close over the 2nd square root relationship of the 2013 low at 1247 is needed to shift our trend bias to positve
XAU/USD Strategy: Favor the short side under 1247.
Focus Chart of the Day: EUR/USD
The next couple of days will be an important test for the USD – especially against the European currencies. From a cyclical perspective, the high recorded at the start of the year in EUR/USD looks potentially important. The price action up to now has unfolded pretty much how we expected it would with the pair moving steadily lower while eroding through a key support level at 1.3655. Ideally we would like to see the Euro stay below 1.3655 if our broader topping view is correct, but this is a big ask with both the ECB and US Employment data on tap and a move above this level intraday would not surprise. On the downside, the 3rd square root relationship of the 2013 high at 1.3540 is the next clear attraction and any weakness under this level should set off a more important move lower into the next cyclical turn window around the end of the month. Only aggressive strength through last year’s closing high near 1.3800 undermines our broader view.
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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
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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
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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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