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Price & Time: Sterling Surprise

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Talking Points

  • GBP/USD takes out key resistance
  • USD/JPY nearing cycle turn
  • USD/CHF fails at near-term Fibonacci retracement

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Foreign Exchange Price Time at a Glance:

Price Time Analysis: USD/JPY

PT_JAN_22_body_Picture_3.png, Price amp; Time: Sterling Surprise

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/JPY continues to meander around the 1st square root relationship of the year’s high at 104.40
  • Our near-term trend bias is lower in the exchange rate while below 104.85
  • Interim support is seen around 103.85, but weakness under the 2nd square root relationship of the year’s high at 103.35 is needed to set the stage for a more important and immediate decline
  • A turn window is seen over the next few days
  • Only a close over 104.85 would shift our near-term trend bias back to positive

USD/JPY Strategy: Like the short side while below 104.85

Price Time Analysis: USD/CHF

PT_JAN_22_body_Picture_2.png, Price amp; Time: Sterling Surprise

Charts Created using Marketscope – Prepared by Kristian Kerr

  • USD/CHF touched its highest level in two months on Tuesday before failing at the 78.6% retracement of the November/December range at .9155
  • Our near-term trend bias in higher is USD/CHF while over .8985
  • The .9155 level is now key resistance and traction over this level is required to signal the start of another leg higher in USD/CHF
  • The is a strong chance the rate has turned early, the next turn window is around the middle of next week
  • On a daily close below the 2nd square root relationship of the 2013 low at .8985 would turn us negative on the rate

USD/CHF Strategy: We like adding to long positions on the weakness expected over the next few days provided .8985 holds.

Focus Chart of the Day: GBP/USD

PT_JAN_22_body_Picture_1.png, Price amp; Time: Sterling Surprise

The price action in GBP/USD this morning has caught us a bit by surprise. Since peaking on January 2nd the rate had unfolded nicely to the downside (though it was never able to close below the 2nd square root relationship of the YTD high at 1.6345). We were looking for this decline to resume today, but the market obviously has had other ideas. Assuming that we don’t get any late day theatrics, this action argues that the Pound has found a low much earlier than expected and this casts serious doubt on the actual importance of the January 2nd high. We were thinking it was a multi-month high, but now we are not so sure. While it could still be some sort of re-test before heading lower, the odds are certainly shrinking. The 2013 closing high at 1.6570 is critical resistance and a daily close over this level would further undermine the cyclical significance of January 2nd. A move back under the 1st square root relationship of the year’s high at 1.6470 is needed to reinvigorate immediate downside prospects.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

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

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EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinonFX.

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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

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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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

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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