Analys från DailyFX
Price & Time: The ’Unbreakable" Floor in EUR/CHF
Talking Points
- Opportunities in EUR/CHF over the next few days
- USD/JPY overcomes important Gann level
- USD/CAD approaching key support zone
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY closed over the 3rd square root relationship of the year’s low at 103.75 yesterday
- Our near-term trend bias remains higher in the exchange rate while over 102.75
- The 78.6% retracement of the year’s range at 104.45 is the next main line of resistance
- The middle of next week is a potential cycle turn window
- Only weakness back under 102.75 would turn us negative on the exchange rate
USD/JPY Strategy: We like the long side while over 102.75
Price Time Analysis: USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/CAD has come under pressure following last month’s failure from just above the 50% retracement of the 2009/2011 decline
- Our near-term trend bias is lower in Funds while below 1.1120
- A daily close under 1.1010 is needed to prompt a downside resumption, but weakness under 1.0910 is really required to signal the start of a more important decline
- A cycle turn window is seen later next week
- A move back through 1.1120 would turn us positive on the exchange rate
USD/CAD Strategy: Square, but aggressive traders could look to sell into strength against 1.1120.
Focus Chart of the Day: EUR/CHF
We don’t spend too much time looking at EUR/CHF these days. Prior to the SNB’s decision to implement a floor at 1.2000 more than two and a half years ago it was a great barometer of European and global risk appetites and just a good instrument to trade. Now not so much, which was no doubt by design of the SNB. We don’t think it is a coincidence that Gold in USD terms also peaked on the very day the floor was announced. There was clearly a concerted global effort to eliminate the allure of traditional safe havens. So far the gambit has worked, but we have little doubt that the SNB’s attempt to alter the primary trend will one day fail spectacularly. The real question is when? At the moment the market’s faith in policy makers and their “powers” is high. This will change and when it does 1.2000 will give way. This is probably a ways off given current social mood, but at the risk of sounding like Yogi Berra, probably not as far out as some might think. Opportunities do still arise from time to time in the cross (the next few days is one of them), but admittedly the artificial suppression of volatility makes it a very difficult exchange rate to analyze from a cyclical perspective. That said, a few cyclical relationships will be converging over the next few days. With the cross trading higher since early March we are looking for some kind of high into this turn window.
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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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