Analys från DailyFX
Price & Time: USD/JPY Sentiment Getting Ebullient
Talking Points
- EUR/USD nearing important cycle turn window
- XAU/USD trades to 5-month low
- USD/JPY sentiment at historical extremes
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
- EUR/USD traded to its highest level since late October on Friday before encountering resistance just ahead of the 61.8% retracement of the October/November decline at 1.3625
- Our near-term trend bias is positive on the Euro while over 1.3430
- A push through 1.3625 is needed to force another leg higher
- An important cycle turn window is seen around the second half of the week
- Only a daily close below the 6th square root relationship of the year’s low at 1.3430 would turn us negative on the rate
EUR/USD Strategy: Don’t like buying Euros this close to the cycle turn window.
Price Time Analysis: GOLD
Charts Created using Marketscope – Prepared by Kristian Kerr
- XAU/USD finally broke away from the 5th square root relationship of the August high at 1242 on Monday as the metal traded to its lowest level in five months
- Our near-term trend bias is lower in Gold while below 1286
- The 1st square root relationship of the year’s low at 1214 is key support ahead of 1180
- Some caution is recommended here as a Gann cycle turn window is in effect today
- Only a daily close over 1286 would turn us positive on XAU/USD
XAU/USD Strategy: Like being square for a few days.
Focus Chart of the Day: USD/JPY
The Daily Sentiment Index (DSI) in the Yen reached just 7% bulls on Friday. The market is very confident that USD/JPY is headed higher in the near-term. We now have our doubts. When sentiment gets so lopsided it is usually a strong sign that a market has begun to get a little ahead of itself (at least in the short-term). Additionally several short-term cyclical methodologies suggest Monday was the right time for at least a minor peak that could lead to a few days of corrective behavior. The 103.00 to 103.70 area is also full of several key resistance levels including the 161.8% extension of the Sep/Oct decline, the year’s high and a Gann angle line related to the 2007 high – all of which are important enough in their own right to inspire some sort of counter-trend reaction. Of course the counter argument to all this is that exchange rate is breaking out of a multi-month consolidation (i.e. has a lot of “stored energy”) and corrections will be limited and few and far between. We now prefer a buy into weakness strategy, but a clear move through 103.70 would change this.
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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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