Analys från DailyFX
USD/CHF Technical Analysis: Long-Legged Doji Off of Support
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Talking Points:
- USD/CHF Technical Strategy: Flat, previous short stopped out.
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- SSI remains stretched in Swissy by a tune of +3.28-to-1 and this is bearish. Click here to learn more about SSI.
USD/CHF has provided an interesting display of price action over the past seven months. From mid-October of last year until the end of November, Swissy rallied all the way from .9475 up to a high of 1.0327. This was a strong, consistent burst higher that set a 5-year high in the pair.
But since that high was set in early December, it’s been a markedly different story for the Swissy. As the Federal Reserve backed away from the median expectation for a full four interest rate hikes in 2016, the US Dollar has gotten obliterated and this is quite evident in the technical formation on USD/CHF. The issue at current is one of entry protocol, as the most recent swing high took place at the .9800 vicinity, and given current price action, this would amount to an approximate ~230 pip risk outlay.
But perhaps more vexxing for the idea of continuation setups is the recent support hit that we’ve seen at the .9441 level, which is the 61.8% Fibonacci retracement of the ‘big picture’ move in the pair, taking the 2005 high to the 2011 low. Not only did we get a support hit, but the day that support came into play produced a long-legged Doji, which can often pop up around a significant market turn.
At this point, the potential reward down to support of .9441 (approximately 132 pips as of this writing), obviates the setup given the 230 pip risk level that might be required to trade the setup.
More interesting would be continued development of the bearish structure, which could come to fruition should a ‘lower-high’ print at the prevoius resistance area around .9660.
Created with Marketscope/Trading Station II; 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
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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
To be added to Christopher’s e-mail distribution list, please fill out this form
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