Analys från DailyFX
US Dollar Enters Buy Zone against Canadian Dollar
- EURUSD resistance clusters around 1.3745
- GBPUSD at multiyear highs; 1.6600/50 is support
- USDJPY bearish engulfing pattern
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Weekly
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-EURUSD remains capped by the trendline that connects the 2008 and 2011 highs (exceeding that level could trigger a breakout). The break below the trendline that extends off of the September and November lows increases the probability that the late December high is significant. The underside of that line crosses 1.3730 on Monday and 1.3754 on Friday.
-The rally from the February low would consist of 2 equal legs at 1.3768.
-The late December failure also raises the possibility of a double top with the October and December highs. The pattern would trigger below 1.3294 and yield a 1.2757 objective. This level is in in line with the 2013 low.
Weekly
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-GBPUSD found support last week from former resistance levels; specifically the October high and top side of the line that extends off of the 2009 and 2011 highs.
-The move to new highs opens up the November 2009 high at 1.6877 then the 2005 low and 2009 high at 1.7042/46. The measured objective from this year’s 1.6667-1.6251 range rests at 1.7083.
-1.6600/50 is support for longs.
Weekly
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-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067.
-The largest advance since the October top is underway. The advance is impulsive (5 waves). The implications are for a pullback into .8820/30 (but maybe not before a run on .9085) before another rally attempt towards .9166-.9267. The trendline that extends off of the April and October highs crosses .9166 in mid-March.
Weekly
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-NZDUSD is testing a trendline confluence defined by the line that extends off of the October and January highs as well as the underside of the line that extends off of the August and November lows.
The level is reinforced by the 1/14 close (high day YTD). In other words, this is a great place for a reaction.
Weekly
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-USDJPY finishes the week right below the trendline that connects the lows from November 2012 and October 2013. Of note as well is a bearish engulfing pattern. In FX, real engulfing patterns can only occur on a weekly (or monthly) time frame since a gap is required. A bearish engulfing pattern requires a gap higher and close below prior period’s open. Only the bodies of the candle are considered.
-Longer term, there is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.
Weekly
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–Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
-USDCAD is at support now.
Weekly
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-The USDCHF may have completed a corrective decline from the 2012 high in late December. The decline is in 3 waves, channels in a corrective manner (connect the origin of waves A and C and project a parallel from the terminus of wave A to project the terminus of wave C), and consists of 2 equal waves (would be exactly equal at .8888…the lowest weekly close was actually .8885).
-The break above the trendline that originates at the July high adds credence to a larger trend change but the rate remains capped by the June and August lows. The market must stay above the December low in order to maintain a constructive longer term bias.
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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