Analys från DailyFX
Price & Time: NZD/USD
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Talking Points
- NZD/USD testing failed support zone
- Cycle convergence warns of potential counter-trend recovery
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NZD/USD: Waiting On The Fed
I wrote last week that the bigger picture inflection point for NZD/USD looks to be during the 4th quarter of this year. However, there are plenty of minor cycle relationships to navigate through before then. We seem to be in one of those periods now as last week’s low came right on the 161.8% time extension of the internal cycle from the key lows in 2012 and 2013. Last week also marked a fairly clear Fibonacci back count as it was 21 weeks from the July high, 62 weeks from the June 2014 high and 144 weeks from the December 2012 high. The next few days is also another harmonic time relationship related to the 2009 “Global Financial Crisis” low and the 2010 low. That cycle has proven especially important over the years as various geometric relationships from it have led to important turns in the exchange rate since 2010.
As I said last week, the Kiwi’s break of the support confluence zone between .6350 and .6425 (61.8% retracement of the 2009 – 2011 advance, the 50% retracement of the 2000 – 2011 advance and the lower parallel of a pitchfork connecting the key highs and lows of 2013 and 2014) suggests the broader risk is that NZD/USD gravitates towards the next important support cluster near .5800 – .5725 (78.6% retracement of 2009 – 2011 advance, the 61.8% retracement of the 2000 – 2011 advance, the 261.8% extension of the 2013 – 2014 range and a trendline connecting the 2001 and 2009 lows) in the medium-term. Markets tend not to go in straight lines, however, so if we are going to see a counter-trend recovery of any significance before 4Q then now is probably a decent time for it given the confluence of relationships over the past week or so.
The failed support between .6350 and .6425 now looks critical in this regard with traction above this zone needed to signal the start of a recovery of some significance. Failure to get above here within the next few days would favor a continuation lower.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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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