Analys från DailyFX
Silver Price Break Continues, Searching for Support; NFP Friday Awaits
What’s inside:
- Silver price trading down into key support zone
- Silver and gold both looking lower, gold doesn’t have good support again until 1180.
- NFPs on the docket for tomorrow
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Since Tuesday, when we last took a look at silver, it has continued to drop below the December trend-line as anticipated, and was unresponsive to the first level of support around 17.40 (old neckline of inverse HS pattern). Gold also failed to hold its first level of support around the 1217 mark. The decline in precious metals has been fierce, but further losses ahead look likely given the velocity at which they have declined so far, and due to gold not having another real support level readily available until 1180.
Silver is currently sitting on an area of support above the 17 mark. It has confluence here of both horizontal support extending back to June and a back-side test of the July trend-line. Barring a sharp counter-move, this may only prove to be a minor stopping point. However, selling into the current decline, especially with support at hand, doesn’t hold good risk reward at this time. Either a weak bounce to alleviate short-term oversold conditions, or a drop below noted support around 17 and retest of that area on a bounce (old support = new resistance) will be viewed as an opportunity to potentially cash in on further weakness. The latter scenario is preferred. The next level of support below 17 comes in at 16.64.
Silver: Daily
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Gold: Daily
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Coming up here in just a bit we have the ECB rate decision/press conference, which could spark volatility across the risk spectrum. Tomorrow, we have the monthly U.S. jobs report (NFPs); barring a major deviation to the downside from the expected 200k new jobs added during February, there may not be much volatility as probability (per Fed Fund futures) for a rate hike at the March FOMC meeting is nearly 100%. (See the economic calendar for details.) As per usual, though, be prepared for the unexpected and manage risk accordingly.
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—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
You can follow Paul on Twitter at @PaulRobinonFX.
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
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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