Analys från DailyFX
USDJPY Runs into a Wall; Look for a Dip
- EURUSD support is now 1.3815
- AUDUSD closing in on long term resistance
- USDJPY could find minor top early next week
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Weekly
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-EURUSD has broken above the trendline that connects the 2008 and 2011 highs and traded to its highest level since October 2011. Former resistance is now support at 1.3713/30. The top side of the broken trendline reinforces this level as support.
-1.4074 is a reaction level / target for next week. This is where the rally from the November low would consist of 2 equal legs. Channel resistance also rests up there. Looking farther out, 1.4300-1.4450 is probably the topping zone for the move that started at the July 2012 low. It’s worth noting that important tops have formed in April before (being early is as bad as being late).
Weekly
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-GBPUSD found support a month ago from former resistance levels; specifically the October high and top side of the line that extends off of the 2009 and 2011 highs. The rally from the level signals a significant breakout. That doesn’t mean that the breakout can’t fail of course.
-GBPUSD traded to the highest level since November 2009 but did form a weekly key reversal 2 weeks ago and a doji this week. The developments could be warnings that the breakout will fail.
Weekly
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-The next major target in AUDUSD is .7937. This target is determined by the .8847-.9757 range (.8847 – (.9757-.8847). Interestingly, the 50% retracement of the decline from the 2001 low registers at .7927. ‘Chartwise’, the 2010 low is at .8067.
-AUDUSD is nearing the .9166-.9267 resistance zone. The bottom of the zone intersects with trendline resistance (off of the April and October 2013 highs) next week.
Weekly
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-NZDUSD spent much of the week above the line that extends off of the April and October 2013 highs but closed the week at the line. The development could indicate a false break.
-A large rang key reversal unfolded on Friday. Still, weakness below .8242 is needed to suggest that the path is lower.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-USDJPY tested the underside of the trendline that connects the lows from November 2012 and October 2013 (again). Friday’s high is also in line with the May 2013 high. January lows rest at 103.85. Friday’s reaction paints a picture of a market at risk of a pullback.
-102.50 is now support. Failure to hold that level risks a drop into 101.65.
-Longer term, there is an Elliott case to be made for a return to the 4thwave of one less degree. The range spans 93.78 to 96.55.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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–Measured objectives from the breakout above the 2011 high range from 1.1680 to 1.1910. The Jul 2009 high rests in this zone at 1.1724 and the 2007 high is near the top of the zone at 1.1875.
-From an Elliott perspective, it’s possible that the rally from the 2012 low composes a ‘3rd of a 3rd (or C)’ wave from the 2007 low.
-The close above the line that extends off of the 2002 and 2009 highs as well as the close above corrective channel resistance add credence to the 3rd of a 3rd wave position.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-USDCHF has broken to its lowest level since October 2011. A massive head and shoulders top is completed (again) after a false break in October, and neckline retest in January. There is no chart support until .8566 (October 2011 low) and the head and shoulders target is .8071.
-Use .8930 as a pivot. In other words, price needs to exceed .8930 in order to negate downside bearish implications from the break.
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.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
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
To be added to Christopher’s e-mail distribution list, please fill out this form
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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