Analys från DailyFX
Price & Time: Looking for the Pound to Peter Out
Talking Points
- Convergence of cyclical relationships point to a reversal in GBP/USD
- EUR/USD trades to lowest level in a month
- Gold nearing key retracement levels
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD briefly broke under the 2nd square root relationship of the year’s high at 1.3730 this morning to trade at its lowest level in a month
- Our near-term trend bias is lower in the exchange rate while below 1.3875
- The 1.3730 remains a critical downside pivot with a daily close below needed to confirm that a more important leg lower is indeed underway
- A minor cycle turn window is seen early next week
- A move back over the the highs of the week at 1.3875 would turn us positive on the exchange rate
EUR/USD Strategy: We like the short side while below 1.3875
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- GOLD traded at its lowest level in almost a month and a half yesterday before finding support just ahead of the 50% retracement of the December/March advance at 1285
- Our near-term trend remains lower in the metal while below 1350
- Weakness under 1285 is needed to signal that start of a new leg lower that exposes a confluence of supports at 1260
- The latter part of next week is an important cycle turn window
- A move back over 1350 would turn us positive on the metal
GOLD Strategy: We like the short side while under 1350.
Focus Chart of the Day: GBP/USD
The next couple of trading days look quite important for GBP/USD from a timing perspective. A few different cyclical relationships are converging during this period – the most important of which is probably an 8.6 month “Pi cycle” related to last year’s low. A similar relationship existed around the middle of the month in Gold right before it turned down. With Cable rallying fairly aggressively over the past few days into this turn window we are looking for secondary peak to develop in the exchange rate. We can’t rule out some final strength on the day, but the resistance zone between the 50% and 61.8% retracements of the most recent Feb/March decline around 1.6640/80 looks like an ideal turning point area. Weakness under 1.6555 will probably be enough to confirm that a top is in place, while continued strength after Monday over 1.6680 would severely undermine our negative cyclical 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
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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