Analys från DailyFX
USD/CHF Technical Analysis: Hanging On to the Prior Trend
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Talking Points:
- USD/CHF Technical Strategy: Intermediate-term up-trend still alive; near-term bearish.
- The bullish price action previously showing in USD/CHF has waned as prices are now testing deeper support levels.
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In our last article, we looked at the congested move-lower in USD/CHF as the prior up-trend continued to retrace. And while the move-lower has persisted now for over six weeks after resistance came-in after new six-year highs, the bulk of the trend remains in-tact and this can keep the door open for top-side strategies.
Of particular interest to bulls is the zone of potential support running from .9947 up to the vaulted ‘parity’ figure at 1.0000. This 53-pip zone of support has numerous reasons to elicit interest: This had helped to form the resistance of the prior range that lasted for much of 2016. At .9951 we have the 61.8% Fibonacci retracement from the major move in the pair spanning the 2010 high down to the 2011 low. And at .9947 we have the 50% retracement of the ‘post-Election’ move in USD/CHF, which can help to demarcate bullish continuation prospects. Should price action fall below this zone, bullish continuation can be thought of as less-likely, so this can become an opportune zone to place stops or manage risk on bullish positions. On the Daily chart below, we’re looking at the current setup in Swissy with emphasis on this potential zone of support.
Chart prepared by James Stanley
On the shorter-term chart below, we can see buyers attempting to defend this confluent level above .9950, and the multiple wicks showing very near this level of support highlights multiple attempts from bears to drive below; each which was rebuked by buyers. Just a day later bears attempted to re-drive below support, but this time bulls showed up even-quicker, leading to the short-term higher-low shown on the chart below:
Chart prepared by James Stanley
For those that want to wait for confirmation or move-forward with a more-conservative stance, awaiting another ‘higher-high’ can highlight a greater indication that bulls may be able to take control of near-term price action. The prior swing-high came in at 1.0025, and a break-above this level will give us a fresh higher-high on the hourly chart to go along with that recent higher-low, signaling bullish continuation prospects on the near-term setup.
— 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
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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
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