Analys från DailyFX
Price & Time: What Is GBP Volume Telling Us?
Talking Points
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Foreign Exchange Price Time at a Glance:
Price Time Analysis: USD/JPY
ChartPrepared by Kristian Kerr
- USD/JPY stalled out last week near the mid-June highs
- Our near-term trend bias is higher in the exchange rate while above 122.20
- A daily close above the 78.6% retracement of the June – July decline at 124.70 is needed to re-instill upside momentum into the rate
- A very minor turn window is eyed here
- A close under 122.20 would turn us negative on USD/JPY
USD/JPY Strategy: Like the long side while over 122.20
Price Time Analysis: NZD/USD
ChartPrepared by Kristian Kerr
- NZD/USD failed last week at trendline connecting the April/June highs near .6700
- Our near-term trend bias is lower in the bird while below .6700
- A move back under .6500 is needed to re-instill downside momentum into the exchange rate and set the stage for a test of the Fibonacci attraction just under .6400
- A very minor turn window is seen today
- A daily close above .6700 would turn us positive on the kiwi
NZD/USD Strategy: Like the short side while below .6700
Focus Chart of the Day: GBP/USD
The idea that “volume precedes price” is a key concept of technical analysis. This has always been a source of contention for FX traders as the decentralized nature of the currency market made trading with volume all but impossible (unless one worked at a bank and had access to EBS/Reuters data). FXCM helped address this discrepancy last year with the introduction of real time volume figures and analytics. While not a large sample size, the result of having this extra bit of analytics has been quite useful. GBP/USD has been especially interesting as daily On-Balance Volume (essentially a running tally of volume flow) has done a good job of pinpointing various inflection points. For instance, last year’s high and the high last month were preceded by pretty clear OBV divergences. All this brings me to the point of this note today as daily OBV in cable has fallen rather dramatically over the past few weeks to new lows for the year. Is volume preceding price?
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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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