Analys från DailyFX
USD/CAD Technical Analysis: USD/CAD Takes the Elevator Down to 21-DMA (Levels)
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Talking Points:
- USD/CAD Technical Strategy: The Correction Is Here, Awaiting Base to Buy
- 1.4140-1.4200 Zone of Support Worth Focusing on for ‘Dip Buying.’
- US Dollar Strength in Question Worth Watching
The air is coming out of the USD/CAD bubble. However, we should be aware that we are still above key support such as the 21-DMA. A lot of the move higher in the Canadian Dollar today is supported by two key themes today. First, Oil is seeing a bit of a turnaround today, although the sustainability of such a move higher in Oil is in questions, but not out of the picture.
Second, the Bank of Canada threw cold water on the traders that were too eager to sell the CAD based on perceived easing by the Bank of Canada. This announcement has led to a repositioning across the market in CAD whereas those who were holding short-CAD positions on now apparent false hopes are exiting their positions.
The zone of focus for support now sits at the 21-dma at 1.4141 up to the top of the proposed wave ‘I’ 1.4186. A sustained move higher would turn the focus toward ST resistance at 1.4440 and 1.4540. A break above that 100 pips zone of resistance would turn attention back toward 1.4700. Given that the macro picture does not change in a day, it is hard to say the trend is over.
When looking at sentiment, Crowd Sentiment Extremes Have Lessened on USD/CAD, which shows that traders don’t think USD/CAD is as overbought as they once did. On the sentiment chart below, you will also notice that there are the fewest number of USD/CAD bears since early December. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives a signal that the USDCAD may continue higher.
USD/CAD Speculative Sentiment Index as of 1/20/2016
T.Y.
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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
—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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