Analys från DailyFX
Price & Time: Waiting On USD/CHF
Talking Points
- USD/JPY closing in key extension level
- Crude nears important Fibonacci convergence zone
- Nagging divergence persists in USD/CHF
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
- USD/JPY traded at its highest levels since December of 2007 earlier today
- Our near-term trend bias is higher in USD/JPY while above 113.15
- The 200% extension of the October decline near 115.00 in the next important resistance zone
- A minor turn window is seen early next week
- A daily close under 113.15 would turn us negative on USD/JPY
USD/JPY Strategy: Like the long side while over 113.15.
Price Time Analysis: USOil
Charts Created using Marketscope – Prepared by Kristian Kerr
- Crude cracked the 2012 low yesterday to trade at its lowest level in three years
- Our near-term trend bias is lower in the commodity while below 82.80
- A convergence of the 50% retracement of the 2008-2011 advance and the 200% extension of the 1H14 range around 75.50/74.80 is the next major downside attraction/pivot
- An important turn window is eyed around the latter part of the month
- A close over 82.80 is needed to undermine the immediate negative tone in Crude
Crude Strategy: Like the short side while under 82.80
Focus Chart of the Day: USD/CHF
The dollar is generally stronger this morning led once again by USD/JPY. There are signs that the latest push higher in the Greenback is becoming more broad based as Cable managed to eke out a new low for the year in early European trade. USD/CHF still remains a point of contention for us as we view the exchange rate in the same vein that Dow theorists view the Transports. USD/CHF printed a new high for the year this week, but only barely and failed to register a new closing high for 2014. We would like to see the exchange rate close over .9667 or break meaningfully above .9690 to negate this potential divergence with the euro and set the stage for a meaningful push higher in the USD into the end of the year. Cyclical analysis suggests that a failure to achieve a new high in USD/CHF over the next few sessions could delay meaningful gains in USD/Europe for several weeks.
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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.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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
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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
- Very relaxed at USD 75/b. Risk barometer will likely fluctuate to higher levels with Brent into the 80ies or higher coming 2-3 weeks
- Brent needs to fall to USD 58/b to make cheating unprofitable for Kazakhstan
- All eyes on OPEC V8 and their July quota decision on Saturday
- Brent steady at $65 ahead of OPEC+ and Iran outcomes
- A shift to surplus will likely drive Brent towards the 60-line and the high 50ies
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