Analys från DailyFX
Technical Weekly: USD/CAD and 40 Year Old Trendlines
- GBP/USD could pause but headed to 1.3500
- USD/JPY turns where it should
- USD/CAD major zone
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–Technical Weekly wishes to share some monthly charts in today’s report as a new month begins on Monday.
EUR/USD
Monthly (linear)
Chart Prepared by Jamie Saettele, CMT
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“I’ve noted long term EUR/USD bottoming conditions recently such as the key reversal in January, divergence with RSI (monthly and weekly) and the channeling decline. Price needs to take out the blue trendline in order to get bullish though because the rally from January is left as a 3 wave advance and ‘counts’ as a 4th wave within a 5 wave decline from the 2016 high. The implication is that a 5th wave lower is possible to at least 1.0200 (measured target based on wave 1 = wave 5).” You can view the blue line in the prior week’s FXTW but it’s been broken (on the gap). French election or not, this all seems to be part of a broad bottoming attempt that started in March 2015. The underside of the 1985-2000 trendline (linear) is being tested now so near term downside may be in store. The underside of that line on log scale is in the 1.2000s.
EUR/USD
Monthly (log)
Chart Prepared by Jamie Saettele, CMT
GBP/USD
Monthly (log)
Chart Prepared by Jamie Saettele, CMT
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Recent comments have noted that “for the 3rd time in history, a string of 6 consecutive down quarters has ended (see here). Focus is towards at least 1.3400-1.3500. The 52 week average and the 9/30/2016 uncovered close at 1.2965/75 should be noted as a minor hurdle.” The minor hurdle is being tested now. Allowing for a pause (pull back), focus is towards the mentioned 1.3500 before real problems arise.
AUD/USD
Weekly (linear)
Chart Prepared by Jamie Saettele, CMT
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Every AUD/USD poke into .7700-.7800 over the last year has failed. The main consideration for resistance up there are from parallels. As long as price is below the parallel, longs are fighting an uphill battle. After the February top, I noted that “the dip could extend to the October and December 2015 highs at .7385.” That level is in play barring a breakout through the top of the range. I’ll note that 67 weeks have passed since the January 2016 low. The final low within the bottoming sequence in the early 2000s was 70 weeks from the initial low. Momentum is much weaker now than it was then but the timing is interesting.
NZD/USD
Monthly (linear)
Chart Prepared by Jamie Saettele, CMT
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Don’t forget about the 2015-2016 trendline near .6780 in Kiwi. Bigger picture, I remain non-committal. Is the rally from August 2015 countertrend or a new trend? The 2016 and YTD highs are at major resistance from the 2011 low and a double top target is still unmet at .5899. A break under the 2015-2016 trendline (.6780) would tilt the boat in favor of more downside. Strength through .7090 is needed in order to turn the near term picture positive.
USD/JPY
Weekly (linear)
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
The following was put forth in the USD/JPY Q2 forecast. “A major USD/JPY level could be met in April. The 52 week average (support and resistance for years) is near 108.30 and the 50% retracement of the decline is at 108.81 (the 1991 high was a 50% retracement of the 1990 decline by the way). The decline from the January high would consist of 2 equal legs at 108.49. This zone (108.30/81) intersects with the developing channel from the January high in mid-April.” The level has been met and USD/JPY is nearly 4 big figures off of the low (to high). Price above 110.10 (lows in late March and early April) is a good sign. The upper channel line remains resistance.
USD/CAD
Monthly (linear)
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
Last week’s update noted that “USD/CAD has revisited the highs so the bull trap possibility is back on the table. The long term parallel (support in October 2015 and resistance in late 2016) is near 1.3700. The 61.8% of the drop from January 2016 is 1.3838.” The lower end of the range has been met (high was 1.3697 today). Some of the biggest pivots in history have occurred on the long term slope lines shown above. We’re in the vicinity so pay attention.
USD/CHF
Monthly (log)
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
USD/CHF is trading at its 10 year average…and 3 year average…and 1 year average (10 year average shown on this chart). The point is that current USD/CHF conditions are trendless (thanks SNB). How long does this last? Don’t know but the charts indicate a breakout above a long term parallel in November thus focus is towards the upper parallel (near 1.1500). Failure to follow through on the breakout casts doubt on the validity of the interpretation.
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.
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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
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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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