Analys från DailyFX
Price & Time: Pound Prone to Turn?
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.
Foreign Exchange Price Time at a Glance:
USD/JPY:
Charts Created using Marketscope – Prepared by Kristian Kerr
–USD/JPY closed under the 97.80 50% retracement of the late April advance on Monday
–Our bias remains lower in the exchange rate with focus now on the 1×3 Gann angle line from the February low in the 97.20 area
-Traction below this level needed to setup further downside towards 96.60 and beyond
-The short-term cyclical picture is a bit muddled, but weakness is favored for a couple more days
-A close back over the 1st square root progression from the year-to-date high in the 98.50 area would turn us positive on USD/JPY
Strategy: Favor the short side in USD/JPY while under 98.50.
GOLD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–XAU/USD closed above the 50% retracement of the March to April decline on Monday
-Rebound from the Fibonacci support zone in the 1320 area has been remarkably steady, but our broader bias is still lower in the metal
-Several key retracements and the 1×1 Gann angle line from last year’s closing high converge near 1500 making this an absolute critical resistance area
-Short-term cycle counts point to Wednesday being a potential turning point
-The 3rd square root progression from the year-to-date low near 1430 is now a near-term pivot with weakness below needed to signal a downside resumption
Strategy: We like the reward to risk of selling against the 1500 resistance zone in the next couple of days.
AUD/USD:
Charts Created using Marketscope – Prepared by Kristian Kerr
–AUD/USD rebound last week from just above the 78.6% retracement of the March to April advance has been unimpressive
–Our bias remains lower in the exchange rate with immediate focus on the 2nd square root progression of the year-to-date low in the 1.0320 area
-However, a close below the 3rd square root progression of the year-to-date high is really required to signal the start of a more important decline
-Near-term focused cyclical studies indicate a turn could be seen over the next day or so
-Traction over the 50% retracement of the April range in the 1.0400 area is needed for us to turn positive on the Aussie
Strategy: We still like selling the rate on rallies.
Focus Chart of the Day: GBP/USD
A variety of markets look prone to reverse in the next few days as a major cyclical turn window continues to play out. Cable has joined the mix of potential candidates as a simple bar count on the daily chart above reveals a burgeoning Fibonacci relationship between recent swing points. Further bolstering this view is the resistance level that has capped the rate so far as Monday’s high was an almost perfect 161.8% extension of the mid-April decline. A close today below Monday’s low would be further evidence of a medium-term top while strength back through 1.5545 would begin to invalidate our suspicions.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.
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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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