Analys från DailyFX
Price & Time: Looking for Directional Moves to Develop Soon
Talking Points
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Focus Chart of the Day: Gold
The price action in Gold remains perplexing. Following last week’s reversal off the 4th square root progression of the August high at 1279 the metal has been unable to gain much upside traction as advances have stalled out near 1330. With a cyclical turn window seen in about a week’s time and XAU unable to get over 1350 a low of some sort into this window is the favored scenario (for the moment). The big question for us is whether that metal will break 1279 as that would likely trigger a much more dramatic move lower. A daily close over 1350 is needed to re-focus immediate attention higher.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY touched its lowest levels since mid-August yesterday before finding support at the 7th square root progression of the year’s high in the 96.55 area
- While under 98.60 our near-term trend bias will remain lower in the exchange rate
- The 96.55 level is obviously an important downside pivot with a break below needed to trigger more material downside
- A minor turn window is seen today in the rate
- It would take a daily close over the 5th square root progression of the year’s high at 98.60 to turn the near-term trend bias back to positive
USD/JPY Strategy: Looking to sell into strength, but at much higher levels.
Price Time Analysis: USD/CHF
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CHF fell to its lowest levels since February of last year before finding support at the 10th square root progression of the 2012 high at .8970
- Our near-term trend bias remains lower in the exchange rate while below the 2nd square root progression of the year’s low at .9155
- A daily close under .8970 and the 9th square root progression of the year’s high at .8950 is needed to signal a resumption of the broader downtrend
- A minor cycle turn window is seen on Thursday
- A daily close over .9155 would focus attention higher in USD/CHF
USD/CHF Strategy: Holding existing short positons whilst below .9155.
Price Time Analysis: EUR/GBP
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/GBP has rallied sharply from the Gann cycle turn window identified last week
- Subsequent strength through .8400 has turned our near-term trend bias to positive in the cross
- The 38% retracement of the August to October decline near .8500 is a natural upside attraction
- A very minor cycle turn window is seen on Thursday
- The 1st square root progression of the year’s low at .8420 is important support and only weakness below this level undermines the immediate positive tone
EUR/GBP Strategy: Looking to buy into weakness while above .8420.
— 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
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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
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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