Analys från DailyFX
USD/CHF Technical Analysis: Trend-Line Support as New Resistance
Talking Points:
– USD/CHF Technical Strategy: Longer-term range-bound, intermediate-term bearish shorter-term mixed.
– USD/CHF price action remains rather messy after breeching-below a key support zone earlier in the month.
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In our last article, we looked at a confluent zone of support in USD/CHF in the effort of catching a topside move in the pair. And while that support held for a few days, it was unable to offset the continued drive of sellers until, eventually, support gave way as price action set a fresh seven-month low at .9614. Making up that support zone were two longer-term Fibonacci levels combined with a bullish trend-line projection that can be found by connecting the May, 2015 low to the low from last November’s elections.
Chart prepared by James Stanley
You might notice that near-term price action in USD/CHF looks a bit messy at the moment; and since we’ve run into this confluent zone of support, shorter-term price action in Swissy has been very much like barbed wire. So, for clarity’s sake, we’re dialing out to the weekly chart below, and isolating this trend-line in the effort of getting a better perspective of current dynamics in USD/CHF price action.
Chart prepared by James Stanley
The above chart helps to highlight how we may be looking at what could be bearish continuation prospects in USD/CHF. There are, however, some challenges to such an approach given our current context, chief of which is the fact that the U.S. Dollar appears to be gaining ground, and this, of course, could be a headwind for short USD/CHF scenarios.
However, for those that are looking for or are comfortable with taking on short-USD exposure, attractive risk-reward could be available by trading on recent price action dynamics. On the chart below, we’re looking at three support and resistance levels applied to USD/CHF based on recent price action. Traders that are entertaining a short stance can look to wedge stops above either level of resistance based on how aggressively they want to treat the move, while the three support levels can be used as profit target(s) for a down-side approach.
Chart prepared by James Stanley
— 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
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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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