Analys från DailyFX
Silver Prices: Long-term Support at Hand, Short-term Trend Conflicts
What’s inside:
- Silver futures market positioning alleviates, but is it enough?…
- We will let price action determine whether that is the case or not
- Short-term trend remains pointed lower, but need to be mindful of long-term support
An excerpt from last Tuesday’s commentary: “From an intermediate to long-term standpoint, we have discussed on several occasions the belief that until record long positioning by large speculators in the futures market corrects with price, we believe silver will find it difficult to move higher.” This was another way of saying the path of least resistance was more favorable for the bears than it was for the bulls, but with light summer trading and range-bound market conditions dominating trade it was tough to be strongly convinced in either direction.
Silver Weekly w/Futures Positioning
The record extreme in the futures market has begun to alleviate itself along with the decline in the price of silver, however, it does remain at very elevated levels. Will the decline in positioning be enough, or does a further drop need to first be seen before silver can bottom? (If it’s to even bottom.) Hard to say just yet, but the price of silver is in an area of support which could turn the picture right-side up if it can hold here shortly. From current levels down to around 18 lies solid horizontal support. Should the market continue to fade lower below this zone, then we will need to turn to the trend-line off the December low. To conclude in regards to market positioning – we will let the price action of silver determine when the market’s position has properly adjusted.
Weekly
Turning to the short-term time-frames, the sequence of lower highs and lower lows continues, but has begun to lose some momentum in recent trade. The loss in downward momentum is creating a downward channel, which could continue to keep prices pointed lower and lead to another sharp leg lower as longs throw in the towel, or indicate a bullish inflection point. At this time, it is too soon to draw any type of bullish conclusions from the current price sequence. For now, we will run with the bearish trend sequence until further developments, and lean towards a neutral to bearish stance. But at the same time, we will be mindful of the fact silver has dropped into an area of long-term support which may overwhelm any short-term price configurations. A break above the upper parallel will be the first step in seeing higher prices, then a climb above 19.20 will be needed from there.
2-hour
Follow market sentiment in real-time via FXCM’s ‘Speculative Sentiment Index’.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at probinson@fxcm.com with any questions or comments.
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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