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US Dollar Tumbles and Our Data Shows it Could Fall Further

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Our proprietary retail forex sentiment data suggests the USDJPY could fall further while the EURUSD targets key peaks. Our sentiment-based strategies are trading accordingly.

View individual currency sections:

EURUSD – Euro Poised to Test Key Highs

GBPUSD – British Pound Shows Signs of Life, Looks to Rally Further

USDJPYUSDJPY Forecast to test ¥97 as Japanese Yen Breaks Highs

GoldGold Prices Likely to Remain in Downtrend

SPX500Retail Sentiment Catches Near-Exact Top in the SPX – What Now?

AUDUSDAustralian Dollar Might Bounce, but Crowds Too Willing to Buy

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

ssi_table_story_body_Picture_16.png, US Dollar Tumbles and Our Data Shows it Could Fall Further

Our retail sentiment-based trading strategies can be very streaky—they spend a lot of time doing very well or very poorly and not much time in between. Past performance is not indicative of future results, but those winning streaks tend to occur on above-average forex market volatility.

Several weeks ago we highlighted a surge in volatility prices that suggested we were on the verge of major currency moves across the board. And though that surge initially left us in favor of US Dollar (ticker: USDOLLAR) strength, a more recent shift in market positioning suggests the Japanese Yen may be the best-performer through the foreseeable future.

Indeed, a USDJPY-short position is one of my favorite trading positions through the foreseeable future as the Dollar weakens across the board. All the while, our proprietary retail forex sentiment data leaves us in favor of continued USD weakness versus the Euro and British Pound (EURUSD and GBPUSD strength).

The clear risks of further stock market tumbles would normally leave me in favor of Dollar strength, but here’s why that correlation might prove less relevant through near-term trading.

ssi_table_story_body_Picture_10.png, US Dollar Tumbles and Our Data Shows it Could Fall Further

ssi_table_story_body_1a.png, US Dollar Tumbles and Our Data Shows it Could Fall Further

Download all of our Sentiment-based trading strategies free via an ongoing promo on FXCMApps.com

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.

Contact David via

Twitter at https://www.twitter.com/DRodriguezFX

Facebook at https://www.Facebook.com/DRodriguezFX

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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.

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Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

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

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British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

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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