Analys från DailyFX
USD/CHF Technical Analysis: The Down-Trend Continues
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Talking Points:
– USD/CHF Technical Strategy: Long-Term, Intermediate-Term down-trend.
– Swissy is moving back-down after bouncing from prior swing support at .9440.
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The down-trend continues in USD/CHF. Two weeks ago, price action found support around a prior swing at .9440, and began to move-higher. For a brief period, it looked as though buyers may be able to take control, as prices ran-above the key Fibonacci level at .9684; but after moving up to the prior swing-high around .9765, resistance showed-up as the upward advance began to stall.
After two days of resistance in this region showed over a three-day-sequence to close last week and open this one, sellers began to take over, and as risk aversion continued into this morning, the pair moved back-down to continue the bearish trend.
Chart prepared by James Stanley
This, of course, is due in large part to the continued weakness currently being seen in the U.S. Dollar. This run of weakness in the Greenback has been going for more than seven months at this point as ‘DXY’ has shed more than 10% of its value. Many traders are rightly cautious towards chasing the move-lower, and this could make longer-term setups in Swissy a bit of a challenge at the moment, as we’re still trading above the May 2016 low around .9440.
Given current dynamics, near-term short-side trades could be for traders comfortable looking for a third test of support at .9440. As of this writing, there are approximately 200 pips of potential down to that swing-support, and if using the prior swing-high for stop placement, there would be approximately 140 pips of risk taken on.
For longer-term positions in Swissy, traders may want to wait for a cleaner setup. A support test at .9401 could be particularly interesting for reversal scenarios, as this is the 50% retracement of the major move that spanned May, 2010 to August, 2011. This Fibonacci retracement’s 61.8% level offered numerous bouts of resistance during last summer’s range, and at this point neither the high or low of that major move has been taken-out, so this could be a usable level should support begin to show.
— Written by James Stanley, Strategist 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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