Analys från DailyFX
USD/CHF Technical Analysis: Bullish Channel, Parity for Support
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Talking Points:
- USD/CHF Technical Strategy: intermediate-term mixed, near-term (past two weeks) bullish. .
- We looked at RSI divergence in our last article to highlight that the bearish move may be getting a bit stale, and since then bulls have returned to push prices-higher.
- If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our Speculative Sentiment Index Indicator (SSI).
In our last article, we looked at the breakdown of the prior up-trend in USD/CHF, as the robust bullish move in the second half of Q4, 2016 was facing continued retracement throughout the month of January. But as we advised, the bearish move was beginning to look a bit stale and stretched; and RSI divergence had already begun to show.
Since that article, we’ve seen a relatively smooth bullish trend channel appear as buyers have been able to push prices-higher by ~265 pips off of the lows, highlighted on the hourly chart below:
Chart prepared by James Stanley
The big point of contention in USD/CHF at the moment appears to rest with more broad-based U.S. Dollar themes. After the Greenback saw a near-historic run in the second half of Q4, 2016, the first month of 2017 saw an outsized retracement (which led to that stretched, bearish state we discussed in our last article). But with strength again showing in the Dollar in February, the prospect of bullish continuation can remain attractive in USD/CHF.
For top-side approaches, the level of parity is particularly interesting. This is a major psychological level that’s exhibited quite a bit of support and resistance action as USD/CHF has traded around this zone in the recent past. For those looking to gain bullish exposure, this can be a usable level in a couple of different ways. For more aggressive approaches, traders can look at lodging stops below this level with more near-term iterations of support, perhaps around the 1.0038 level. For those looking to exercise a bit more prudence or patience, waiting for support to show up around parity can open the door for top-side approaches with stops lodged below the .9900 zone of potential support.
Chart prepared by James Stanley
— Written by James Stanley, Analyst for DailyFX.com
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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.
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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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