Analys från DailyFX
USD/CHF Technical Analysis: Stubborn Support Urges Caution for Shorts
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Talking Points:
- USD/CHF Technical Strategy: Short, targets remain at .9500 and .9441. Conditional short identified.
- If you’re looking for trade ideas, check out our Trading Guides; they’re free.
- SSI remains stretched in Swissy by a tune of +3.18-to-1 and this is bearish. Click here to learn more about SSI.
In our last article we looked at another short setup in USD/CHF off of the .9948 Fib level, which is the 38.2% retracement of the secondary major move in the pair, taking the 2010 high to the 2011 low (shown in orange on the below chart). And it took a little while to develop, but since we’ve seen massive USD weakness develop, finally breaking below the upward sloping channel that had started in May of 2015.
The primary obstacle in the setup at current is yet another Fib level that’s continuing to prove stubborn to bears. This is the 38.2% retracement of the most recent major move (shown in maroon below, taking the May 2015 low to the November 2015 high). This support has quelled the declines in Swissy on 3 of the last 4 trading days, and this is enough evidence of a potential short-term low to urge caution to short sellers.
More attractive for short-side setups would be looking to the prior support zone for subsequent selling positions. Should price action find resistance in the zone between .9660 (the February 2016 low) to .9700 (the 50% Fib of the most recent major move), traders could look at short-side entries in the direction of the predominant trend (lower). Traders can use price action to trigger the position by looking for an extended top-side wick in this zone, indicating that sellers may be reacting. This could open the door for profit targets at this current level of support at .9550, followed by .9500 (major psychological level), and then .9400, which is just 2 pips above the 50% retracement of the secondary major move in the pair.
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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