Analys från DailyFX
Technical Weekly: USD/JPY Still Making History
- EUR/USD – dangerous situation
- USD/JPY – nearly 12% in 5 weeks
- USD/CAD bearish wedge gaining traction
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—Quarterly charts and comments
EUR/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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High Frequency Trading Tools
-FXTW wrote last week that “the combination of EUR/USD at range lows (same place as last year in fact…EUR/USD closed at 1.0614 on 12/2/2015), the doji, and sentiment provides a powerful bullish backdrop.” EUR/USD took out the lows, rallied nearly 400 pips (a quarter of that in the seconds after ECB), and reversed almost everything in a few hours. In other words, EUR/USD is left unchanged from where it was in late November. The rejection of the rally post-ECB at the year open, which also filled the mid-November gap, is not bullish. Even so, EUR/USD has yet to break range lows despite DXY trading at nearly 14 year highs. The non-confirmation is a warning. Bottom line, this market is in a dangerous position for either side. I’m wondering if this ends with a 1 day crash and reversal. Check out this video for more.
As always, define your risk points (read more about traits of successful traders here).
-For forecasts and 2016 opportunities, check out the DailyFX Trading Guides.
GBP/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-There is no change to the GBP/USD weekly analysis. “The GBP/USD rally contends with its first major resistance point since the October crash. The levels in question are the July low at 1.2791, August low at 1.2865 and a long term parallel that has cut through some big inflection points over the last 7 years. The 96 month (8 year) cycle low count is still in the back of my mind as well.”
AUD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-There is no change to recent comments as AUD/USD has followed through on the bearish outside week. “AUD/USD traded to its highest since the week of the April high and closed at its lowest week since mid-October. The bearish outside week is…bearish, until further notice. As noted a number of times in recent weeks, a weekly close above .7719 is needed in order to signal a major upside breakout. The action suggests that Aussie is vulnerable.”
NZD/USD
Weekly
Chart Prepared by Jamie Saettele, CMT
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-NZD/USD is still testing the underside of former trendline support. “After reversing from the ‘magnetic’ 1985-1993 trendline, Kiwi carved a bearish outside week which suggested that the interpretation of price action since July as a top, rather than consolidation, would win out. The break under trendline support this week reinforces the idea that NZD/USD is headed lower. In fact, the entire rally from August 2015 may be just a re-test of the long term bear move that began with the double top confirmation in early 2015.”
USD/JPY
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-The 5 week performance (11.8%) in USD/JPY is bested by only the 5 weeks that ended the first week of December 1978 (the rate fell sharply the next 3 weeks). USD/JPY downside is typically associated with sharper moves so it’s interesting to note that the rate has realized 5 week declines of at least 11.8% just 3 times, October 2008 (peak of GFC), October 1998 (LTCM), and October 1985 (after Plaza Accord). 1985 is the only instance that failed to realize a sharp countertrend move. In summary, the extreme rate of change as USD/JPY pressing into the late 2014-early 2016 floor indicates a high risk situation.
USD/CAD
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-The bearish wedge from the May low possibility remains on the table. Weekly RSI turning over at 60 is typical of sideways or downward trends. Also, notice that the rate has turned down from the same price region that price accelerated higher from exactly one year ago. The observation suggests a good deal of vested interest in the price region and therefore potential for an important change to take place.”
USD/CHF
Weekly
Chart Prepared by Jamie Saettele, CMT
See REAL TIME trader positioning
-Don’t forget about the long term time symmetry described here. The rectangle breakout has materialized. Given probes of a VERY long term parallel beginning in November 2015, this rectangle could end up launching a major behavior change and rally to 1.15 or so (trendline from 1985). This interpretation is favored as long as price is above this week’s (outside week) low.
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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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.
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
- Very relaxed at USD 75/b. Risk barometer will likely fluctuate to higher levels with Brent into the 80ies or higher coming 2-3 weeks
- Brent needs to fall to USD 58/b to make cheating unprofitable for Kazakhstan
- All eyes on OPEC V8 and their July quota decision on Saturday
- Brent steady at $65 ahead of OPEC+ and Iran outcomes
- A shift to surplus will likely drive Brent towards the 60-line and the high 50ies
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