Analys från DailyFX
Why is the Australian Dollar Strong and Can it Continue Higher?
– Australian Dollar has rallied to fresh multi-month highs
– Major turn in sentiment warns of further AUD gains
– How might we trade further highs?
Australian Dollar Surges Above Key Resistance, Targets Fresh Highs
Source: FXCM Trading Station Desktop, Prepared by David Rodriguez
After falling for five consecutive months, the Australian Dollar is rallying for one simple reason: there was no one left to sell. In fact, recent CFTC Commitment of Traders data showed that large speculators were near their most short AUDUSD on record.
Australian Dollar Has Further Room to Run Higher as No One left to Sell
Data source: CFTC Commitment of Traders Report
What’s next? We believe that a substantial shift in sentiment warns of a fairly major Australian Dollar bounce off of recent lows. In fact, one of our top forex sentiment-based trading strategies remains long AUDUSD from $0.9031. We’ve seen a substantial swing in forex trader sentiment.
Retail Traders Remained long AUDUSD from $1.03 and have now Flipped to Short
Data source: FXCM Execution Desk Data, Speculative Sentiment Index
What are potential price targets on the potential for the Australian Dollar rally? Our Currency Strategist Ilya Spivak believes that the next major price resistance for the AUDUSD comes in at the $0.9640. That said, the simultaneous breakdown in the Japanese Yen means that the AUDJPY might actually be the more attractive play.
Australian Dollar Near Key 200-day Simple Moving Average versus Japanese Yen
Source: FXCM Trading Station Desktop, Prepared by David Rodriguez
We’ll continue to watch the Australian Dollar versus the US Dollar and Japanese Yen, as we think that this is the start of a larger correction higher. Price levels are fairly well defined, and our sentiment-based Momentum2 system has done well buying into the Aussie Dollar break higher.
Past performance is not indicative of future results, but we believe that positive results in our SSI-based strategies favors playing these systems going forward.
What could invalidate these trades? Put simply: if sentiment turns in the opposite direction, we’ll have little choice but to change our stance.
Follow future updates on the Australian Dollar, our trading strategies, and our Speculative Sentiment Index data via e-mail distribution list.
Automate our SSI-based trading strategies via Mirror Trader free of charge
— Written by David Rodriguez, Quantitative Strategist for DailyFX.com
Contact David via
Twitter at https://www.twitter.com/DRodriguezFX
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.
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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