Analys från DailyFX
Price & Time: Topping Pattern in EUR/JPY?
Talking Points
- EUR/JPY rally from key retracement area stalls
- EUR/USD fails to convincingly break important pivot
- GBP/USD struggling for direction
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
ChartPrepared by Kristian Kerr
- EUR/USD failed to gain traction yesterday below 1.0820 and rallied sharply in response
- Our near-term trend bias is still lower in the euro while below 1.0980
- A daily close below the May low around 1.0820 is needed to kick off a more important decline
- A minor turn window is seen early next week
- A close over 1.0980 would turn us positive on EUR/USD
EUR/USD Strategy: Like the short side while below 1.0980.
Price Time Analysis: GBP/USD
ChartPrepared by Kristian Kerr
- GBP/USD continues to consolidate below the 61.8% retracement of the June – July decline at 1.5700
- Our near-term trend bias is lower in cable while below 1.5700
- A move back under 1.5525 is needed to re-instill downside momentum into the exchange rate
- A very minor turn window is eyed tomorrow
- A daily close above 1.5700 would turn us positive on the pound
GBP/USD Strategy: Like the short side while below 1.5700
Focus Chart of the Day: EUR/JPY
Yesterday we wrote about USD/JPY and our concern that the low volume rally in the exchange rate could lead to some sort of secondary high. Naturally this concern extends to the yen crosses as well. One of the more interesting charts at the moment is that of EUR/JPY. After finding support earlier this month at the 50% retracement of the April – June advance around 133.50 the cross has drifted below the 200-day moving average. This has set up a fairly clear potential head shoulders topping pattern on the daily chart. Weakness under 133.50 would confirm a top of some magnitude and set the stage for a more important run lower. A move back over 138.00 in the cross is needed to invalidate the potential topping pattern and signal a resumption of the medium-term uptrend.
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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.
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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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