Analys från DailyFX
Price & Time: Second Half of the Week Looks Key for the Euro
Talking Points
- EUR/USD nearing important cycle turn window
- USD/JPY smashes through important resistance
- AUD/USD rebounds off key support zone
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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 probed above the 1st square root progression of the year’s high at 102.75 to reach its highest level since late May on Monday
- Our near-term trend bias is positive on the exchange rate while over 100.65
- The 161.8% extension of the September/October decline at 103.05 is the next level of resistance ahead of the year’s high
- A medium-term cycle turn window is seen next week
- Only a daily close below the 2nd square root progression of the year’s high at 100.65 would undermine the immediate positive tone in the rate
USD/JPY Strategy: Focus on long side opportunities while over 100.65.
Price Time Analysis: AUD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- AUD/USD fell to its lowest levels since early September on Friday before rebounding from strong support at the 7th square root relationship of the October high
- Our near-term trend bias is lower in the Aussie while below .9170
- A convergence of several important Fibonacci and Gann levels between .9060 and .9030 suggest it is an extremely important support zone and a daily close below is needed to confirm a resumption of the broader decline
- A medium-term cycle turn window is seen next week
- Only a daily close over .9170 will shift our near-term trend bias to positive in the Aussie
AUD/USD Strategy: We like being flat following the rebound from key support.
Focus Chart of the Day: EUR/USD
The next week or so looks to be quite important for the Euro from a cyclical perspective. Starting around Wednesday and extending to next Tuesday a myriad of different cyclical methodologies all begin to converge. Perhaps the most important is a Fibonacci time relationship with last year’s low and the 1Q13 high at the end of the week. With EUR/USD having rallied steadily for over three weeks now a secondary high (versus the October high) of some kind forming during this turn window is clearly the favored scenario. Only aggressive weakness on a daily close basis over the next few days below 1.3430 would warn that the Euro has peaked ahead of schedule. Such aggressive weakness could also raise the possibility of a cyclical inversion (low instead of a high). Both look like relatively low probability scenarios at the moment.
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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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