Analys från DailyFX
Price & Time: Sterling Misdirection?
Talking Points
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
ChartPrepared by Kristian Kerr
- USD/JPY found support last week at the 3rd square root relationship of the year’s high near 122.45
- Our near-term trend bias is lower in the exchange rate while below 124.80
- A move under 122.00 is needed to set off a more important leg lower in the rate
- A very minor turn window is eyed Tuesday
- A close above 124.80 would turn us positive again on the pair
USD/JPY Strategy: Like selling tomorrow on strength against 124.80.
Price Time Analysis: NZD/USD
Chart Prepared by Kristian Kerr
- NZD/USD closed at its lowest level in almost 5-years on Friday
- Our near-term trend bias is lower in the Bird while below .7000 (closing basis)
- Traction under A Fibonacci level at .6970 is needed to kick off the next leg lower
- An important turn window is eyed over the next few days
- A daily close over .7000 would turn us positive on NZD/USD
NZD/USD Strategy: Like taking profit on short positions into this turn window.
Focus Chart of the Day: GBP/USD
Chart Prepared by Kristian Kerr
The daily GBP/USD chart personifies the lack of conviction in the FX market at the moment. Is the broader downtrend about to re-assert itself or is spot about to undergo a deeper upside correction? Given that the pound turned right during a key date last week we had been open to the former, but on Friday the exchange rate closed right on the 61.8% retracement of the late May range. This morning it has turned lower leaving the open the possibility of a broader head shoulders top and potential primary downtrend resumption. The next few days look important in this regard from a short-term timing perspective. If the broader decline is re-asserting itself here then it should happen fairly quickly. The neckline of the HS pattern comes in around 1.5250 and this level is obviously now a key pivot with traction below needed to confirm that the pound has turned the corner. A daily settlement back over Friday’s high near 1.5600 would re-focus attention on a re-test of the May high.
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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
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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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