Analys från DailyFX
Silver Prices: Replay of Last Week, or Turnaround on the Way?
What’s inside:
- Silver puts in another key reversal day in direction of trend
- Support/target in the 16/15.80 zone yet to be met
- Possible bullish scenario, but will run with the bears until proven otherwise
The price of silver neared our target zone last week, but found buyers before it could reach the 16/15.80 zone. Prior to the thrust which nearly took it to target, this is what we had to say: “(Silver) put in a bearish reversal bar, which leads us to conclude that we should soon see another downdraft…”
Are we in for a replay of last week? Yesterday, silver attempted to rally, but stalled and dropped to close out the day with only a small gain and another key reversal day. Unsurprisingly, the US dollar played out similarly but in reverse; the 21-day correlation between silver and the currency is -95%, a nearly one-to-one inverse relationship.
Silver: Daily
Created with Tradingview
We have a potential battle of technical events on our hands. The downward trend coupled with the bearish reversal day suggests another round of selling is around the corner. However, silver, and the dollar in inverse fashion, are carving out ‘head-and-shoulders’ formations on the intra-day time-frames. It’s possible since 11/18 that silver is putting in a bottom, which may help lift it higher, while the dollar retreats.
60-minute (w/USD)
Created with Tradingview
Which scenario do we go with?
First things first: A ‘head-and-shoulders’ pattern is not valid until the ‘neckline’ is broken. In this case, silver needs to rally above the ’neckline’ and 16.86 (yesterday’s high) with conviction. At this time, the metal is still working on carving out a ‘right shoulder’, so the formation still needs time before becoming a more serious consideration. The reversal day in the direction of the trend coupled with the fact support in the 16/15.80 zone has yet to be met, leads us to remain in the bear camp until proven wrong. A ’neckline’ break would be proof. We would then want to keep an eye on price action heading into the low 17s along with the dollar.
Join me tomorrow (11/30) at 10 GMT for a discussion regarding the US dollar and commodities. For a full schedule of live events, please see our webinar calendar.
—Written by Paul Robinson, Market Analyst
To receive Paul’s analysis directly via email, please sign 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.
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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