Analyst Articles – Forex News 24

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed
EUR/USD Breakout Underway– Levels to Know
OPEC+ Attempts to Curb Bear Market as Russia Favors Oil Around $60-65
Risk Appetite Returns on Central Bank Promises Rather Than Growth Prospects
AUD at Risk From Employment Data, Trade War, Slower Global Growth
USD/CHF Collapse Eyes Yearly Open Support
Gold Price Hits Fresh 2019 High after US Jobs Report
Dollar, Euro, Australian Dollar, and Gold Charts for Next Week
Dollar, Euro, Australian Dollar, and Gold Charts for Next Week
USDCAD, CADJPY Price Action Setups

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

Posted: 07 Jun 2019 10:40 PM PDT

Fed Talking Points:

Though the May NFPs were a modest disappointment notionally, the implication to Fed rate expectations proved severe
The probability of a July Fed rate cut has jumped to 85 percent, September to 95 percent with Dollar and moral hazard charged
Watch gold and global yields as counterbalances to traditional speculative assets as sentiment deals with trade wars and tepid growth

Do you trade on fundamental themes or event risk? See what live events we will cover on DailyFX ahead (including the ECB rate decision and NFPs) as well as our regular webinar series meant to help you hone your trading.

NFPs Leverages Obvious Speculative Interest in Fed Support

Historically, the monthly US nonfarm payrolls (NFPs) figure is one of the most consistently market moving indicators on the global docket. That is due both to its insight into the health of the world’s largest economy as well as its influence over monetary policy decisions from the world’s largest and most influential central bank. Frankly, I set my expectations low for the impact the May figures would wring from the markets this past Friday. The underlying trends from the employment statistics have been driven deep into robust territory such that a backtrack that would lead to direct fears over economic trouble or anticipation of a Fed policy flip seemingly far away. The 75,000 net jobs added to the economy (100,000 less than expected) hold in the unemployment and tick lower in wage growth (to 3.2 percent) would have offered little to systemically alter expectations. The caveat distorting the normal reservation was the heightened state of speculation.

Markets have grown increasingly aware of the fragile state of the global economy and financial system with the late-in-the-cycle position of economy and business health meeting acute threats from external influences like trade wars. This sensitivity has slowly increased the level of volatility in the actual market activity – even if implied readings are still promising restraint. It is in these conditions that the markets will also desperately seek out salvation before speculative benchmarks cross the sentiment Rubicon. Where can we reasonably expect support? A wholesale change in economic fortunes or surge in expected rates of return is unrealistic to expect. That generally doesn’t happen. Resolving artificial crises like trade wars is a possibility, but removing a risk is not the same thing as seeding new opportunity. For something like the S&P 500, there is not much in the way of discount to offer easy pickings.

Chart of S&P 500 Overlaid with Fed Funds Futures Price for September 2019 (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

The Trade and the Signal from the Dow, the Dollar and Gold

Given the shake up in speculative views this past week and the precarious mix of the fundamental backdrop, it is important to keep tabs on markets or benchmarks that can gain serious traction but also stand as indicators of the investor perspective in their own right. We begin with the US equity indices. Risk trends have not offered a uniform optimism this past week across those assets I usually compare for the breadth of conviction, including: global equities, emerging market assets, carry trade, commodities and more. Even through Friday’s acceleration, there was a notable lack of commitment from most markets while those assets that did climb made very little effort to close the enormous gap they maintain to benchmarks like the S&P 500. In US equity benchmarks, there remains a notable lag from the tech-heavy Nasdaq while the broad S&P 500 and blue-chip Dow have enjoyed the reversal of a false head-and-shoulders neckline breakdown. I am partial to the narrower measure which advanced 5 straight trading days (matching the heartiest climb since May 14, 2018) following a 5-week slide (the longest tumble in eight years). Overall, this past week’s performance was the best week since November and third largest rally over a similar period since 2011.

Chart of the Dow Jones Industrial Average and 1-Week Rate of Change (Weekly)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

Conditions are more complicated when it comes to the Dollar. Is the Greenback reverting back to a safe haven – falling as US stocks rally – or is it embracing its status as the top carry currency as returns wane? I think there are an array of headwinds the currency is collectively succumbing to as the general mood of the market is sent into upheaval. It would be a stretch to suggest that the Dollar is conveniently shifting its focus to a troubled rate forecast only now considering expectations of subsequent rate hikes started to collapse beginning in October and official rate cut projections started to bleed in a few months into 2019. The DXY Dollar Index continued to trend higher throughout. That said, recently, the projections for cuts have grown particularly intense. While the probability of a 25 basis point cut at the next meeting in less than two weeks, Fed Funds futures set a July cut at 85 percent and a move by September above 95 percent. This is a burden if the currency is floating carry trade exposure, but I doubt there is much of that baked into this low rate environment market. Instead, more convoluted issues like a constant pressure of trade wars, a troubled economic outlook, Trump pressuring the Fed to act and little hope that authorities could mount support should it be needed are far more unsettling.

Chart of DXY Dollar Index and 200-Day Moving Average (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

Perhaps the most important instrument for the attuned global macro trader moving forward is the bearing and pace of gold. The precious metal is too often considered a mere safe haven. While it certainly has such properties should an unambiguous fear descend on the markets, I think this asset is essential for its particular nuances. Back in the height of the first wave of massive stimulus programs from the world’s largest central banks, the commodity experienced an incredible rally that would eventually top $1,900. That was not a safe haven claim (risk appetite was in full swing from lows during its run from 2009 to 2011). The Dollar was subverted but it was nowhere near as intense or consistent as what we saw from the metal. So where was the demand coming from? With the rise of balance sheet inflation, local financial assets – including currencies and government debt – was inadvertently devalued. If the world’s most liquid currencies were uniformly dropping, there aren’t many places for capital to flow in order to find stability. Gold is one of the very few stand-ins. Could we witness that isolation of needs once again? After an 8-day rally and the strongest week’s rally in three years, we stand at the cusp of a major technical breach which could symbolically complete a massive reversal a decade in the making.

Chart of Gold and Consecutive Candle Count (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

‘Other’ Themes from Trade Wars to Eurozone Stability

As risk trends take firm hold of sentiment, it is worth remembering that everything else starts to register as a catalyst or a means to this more considerable ends. That said, we’ve seen plenty of swells in ‘risk on’ and ‘risk off’ these past years without the trend coming out intact. Whether looking for the additional fuel to sentiment fires or keeping tabs on themes that can come back into vogue as the systemic tide rolls out, there are a few grander issues to keep close tabs on. Trade wars is once such point. After the close Friday (and after I recorded the video), US President Donald Trump announced in a tweet that he would not apply the 5 percent blanket tariff on all Mexican imports that he had threatened to take place on Monday. That is an unmistakable improvement in the balance of global trade relations. A USDMXN response Monday is very likely, but I’m not so confident that general risk assets like the US indices will respond to this news in kind. If that is the case, we have a serious problem as the market will readily recognize a lack of willingness to commit to ‘good news’.

Chart of USDMXN (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

The more embattled trade relationship between the US and China is not so easily diverted it seems. We have not seen any material updates this past week to suggest the two countries have started to pull out of their combined nosedive. While they haven’t increased the tariff list or size of the import tax against each other in at least a few weeks, there is still an overt effort to stymie each other’s business interests. The Huawei ban is still a provocative move which has China warning it has designs on rare earth materials and a blacklist of its own. USDCNH jumped through this past Friday. We aren’t making a break for 7.0000, but the tense relationship is unmistakable and the economic pain adding up as we wait for a resolution is proving very real in economic data.

Chart of USDCNH (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

Outside of the widest fundamental bans of influence, there are still some targeted issues that should be monitored for the weight they carry for specific currencies and regions. The Pound for example has proven time and again that its direct and intention to mark progress rest with the news on the Brexit. That will continue to be the case moving forward, but meaningful updates on the EU-UK divorce are likely some weeks out as the Conservative start the procedure to replace its leader following Theresa May’s stepping down Friday. In other words, Pound will struggle for a lasting move. In contrast, the Euro may find itself tipped into a full-scale move with little notice. Monetary policy is a theme for which the market is particularly attentive, so the ECB’s response to the Fed’s growing dovishness may provoke some of the competitiveness we’ve seen in previous years that gets dangerously close to currency wars. My deeper concerns rest with the situation between Italy and the Union. The European Commission found that the country violated its deficit/debt rules and warranted a disciplinary procedure that could tally a 3 billion euro tab. Despite the threats, Italian leaders have stated they will not halt tax cuts and would look to change financial rules. There has also been talk of using an alternative currency to service debt which would be a natural precursor to an argument on whether or not they should leave the Euro. We discuss all of this and more in this weekend video.

Chart of EURGBP (Daily)

Dow Appetite for Record, Dollar Breakdown Threat, Gold Surge Fueled by Fed

If you want to download my Manic-Crisis calendar, you can find the updated file here.

2019-06-08 03:42:00

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EUR/USD Breakout Underway– Levels to Know

Posted: 07 Jun 2019 10:01 PM PDT

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. Euro rallied more-than 1.5% against the US Dollar this week after breaching above a multi-month resistance slope. The advance takes price within striking distance of a key Fibonacci consideration with the yearly open just higher. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review this week's Strategy Webinar for an in-depth breakdown of this setup and more.

New to Forex Trading? Get started with this Free Beginners Guide

EUR/USD Weekly Price Chart

Notes:In last month's Euro Weekly Price Outlook we noted that EUR/USD had, "responded to multi-year slope support and we're looking for signs of basing in price action with a close above channel resistance needed to clear the way." Price broke through channel resistance this week a +1.5% advance taking Euro back above the August lows at the 1.13-handle.

The breakout keeps EUR/USD constructive while above confluence support at 1.1187. Subsequent topside resistance objectives at the 61.8% retracement of the 2019 range at 1.1393 and the objective yearly open at 1.1445 – look for a more significant reaction there IF reached. A break / close below 1.1107 would be needed to mark resumption of the broader downtrend.

For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: Euro held long-term slope support for over two months with the breach above channel resistance this week shifting the focus back to the long-side as we head deeper into June trade. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of the upper targets here. Ultimately, we'll favor fading weakness while above 1.1187.Review my latest EUR/USD Price Outlook for a closer look at the near-term trading levels.

Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading

EUR/USD Trader Sentiment

A summary of IG Client Sentiment shows traders are net-short EUR/USD – the ratio stands at -1.39 (41.9% of traders are long) – weak bullish reading
Long positions are 11.6% lower than yesterday and 37.3% lower from last week
Short positions are 14.9% higher than yesterday and 60.7% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Traders are further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias from a sentiment standpoint.

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

—

Key Euro / US Data Releases

Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Previous Weekly Technical Charts

Learn how to Trade with Confidence in our Free Trading Guide

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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2019-06-08 04:00:00

OPEC+ Attempts to Curb Bear Market as Russia Favors Oil Around $60-65

Posted: 07 Jun 2019 09:24 PM PDT

Crude Oil Price Talking Points

Crude appears to be entering a bear market as the shift in U.S. trade policy dampens the outlook for global growth, but efforts by the Organization of the Petroleum Exporting Countries (OPEC) may curb the recent selloff as the group remains committed in stabilizing the energy market.

Fundamental Forecast for Crude Oil: Bearish

Crude prices have fallen more than 20% from the 2019-high ($66.60) as the U.S. imposes a 5% tariff on all goods coming from Mexico, and the current environment may keep oil under pressure as President Donald Trump pledges to implement "monthly increases as per schedule."

It seems as though the Trump administration will continue rely on tariffs to carry out its agenda as the president tweets that "the higher the Tariffs go, the higher the number of companies that will move back to the USA," and mounting trade tensions may continue to drag on the price of crude as the U.S. and China, the two largest consumers of oil, struggle to reach a trade deal ahead of the G20 Summit on tap for later this month.

However, OPEC and its allies appear to be taking steps to ward off a bear market as the Minister of Energy of the Russian Federation, Alexander Novak, meets with the Minister of Energy, Industry and Mineral Resources of Saudi Arabia, Khalid Al-Falih, with the representatives noting that "it is important to further promote the active development of bilateral dialogue both at the level of ministries and at the corporate level in order to solve the tasks facing our countries to increase and deepen trade and investment cooperation."

The comments suggest OPEC and its allies will continue to regulate the energy market even though Russia President Vladimir Putin notes that there "have certain differences in opinion regarding the fair price," and the group may respond to the recent selloff in the price oil as Mr. Putin insists "$60-65 a barrel suitsus just fine."

With that said, efforts to reinforce the OPEC+ alliance may curb the recent selloff in crude, but the broader outlook for oil is longer constructive as both price and the Relative Strength Index (RSI) snap the bullish trends from earlier this year.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups.

Oil Daily Chart

Keep in mind, a 'golden cross' formation took shape last month as the 50-Day SMA ($61.28) crosses above the 200-Day SMA ($59.81), but the difference in slope undermines the potential for a bullish signal.

With that said, there appears to be a broader shift in market behavior as the RSI extends the bearish formation from April, but the failed attempts to close below the $51.40 (50% retracement) to $51.80 (50% expansion) region raises the risk for a larger rebound as the RSI crosses back above 30 and flashes a textbook buy-signal.

In turn, a move back above the $54.90 (61.8% expansion) to $55.60 (61.8% retracement) area may spur a move back towards $57.40 (61.8% retracement), with the next region of interest coming in around $59.00 (61.8% retracement) to $59.70 (50% retracement).

Additional Trading Resources

Are you looking to improve your trading approach? Review the 'Traits of a Successful Trader' series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019

— Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

2019-06-08 04:00:00

Risk Appetite Returns on Central Bank Promises Rather Than Growth Prospects

Posted: 07 Jun 2019 06:58 PM PDT

Trade wars persist and the outlook for global growth is slowly eroding, yet that may inadvertently prove the charge that speculative investors have sought. With core and external risks rising, calls for the central banks to step into to provide relief have risen to a fever pitch. After the Fed Chair's remarks last week, the market's assumption of another infusion has clearly taken over.

Gold Prices Ride Trade-War, Low Yield Wave But Rally May Pause

These dubious days for the global economy are unsurprisingly pretty good ones for gold. However, the metal has risen sharply and bulls may not feel ready to push on higher yet

AUD at Risk From Employment Data, Trade War, Slower Global Growth

The cycle-sensitive Australian Dollar is at risk from employment data and trade war developments which are undermining global growth prospects.

Dow Jones, FTSE 100, ASX 200 Fundamental Forecast

The Dow Jones, FTSE 100 and ASX 200 face a relatively quiet week from a data perspective, which may see overarching market themes take control.

OPEC+ Attempts to Curb Bear Market as Russia Favors Oil Around $60-65

Efforts by OPEC and its allies may curb the recent selloff in the price of oil as the group remains committed in stabilizing the energy market.

Sterling (GBP) Weekly Forecast: GBPUSD Price Rallies to a 2-Week High

Sterling (GBP) is expected to remain around current levels over the week, with little Brexit news of late to spark volatility. The process of choosing the next Conservative leader, and Prime Minister, begins next Monday at the start of a week front-loaded full of heavyweight UK data releases.

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

See how retail traders are positioning in the majors using the IG Client Sentiment readings on the sentiment page.

2019-06-09 16:00:00

AUD at Risk From Employment Data, Trade War, Slower Global Growth

Posted: 07 Jun 2019 03:04 PM PDT

AUD FUNDAMENTAL FORECAST: BEARISH

AUD nervously twitches on global growth prospects
The US-China trade war continues to sap confidence
China CPI and Australia employment data in focus

See our free guide to learn how to use economic news in your trading strategy!

The Australian Dollar will continue to feel the pressure of mounting tensions between the US and China as the global economy slows and most central banks all over the world are pivoting away from their rate hike cycles. The G20 Summit this weekend in Fukuoyka, Japan will include finance ministers and central bank chiefs convening to discuss global growth prospects and the US-China trade war.

As an export-oriented economy with China as its largest trading partner, Australia is sensitive to changes in global demand with particularly sharp reactions to Chinese growth. After a fairly significant recovery in economic performance, both economies are now sharply beginning to underperform relative to economists' expectations. Chinese CPI this week may shed more light on China's economic activity.

The following day, Australian employment data will be released. For those trading the Australian Dollar, this will be a high-level event risk to monitor because it will almost certainly stoke a fair amount of volatility. After the RBA cut the OCR to 1.25 percent from 1.50 percent, officials stated that such a measure was taken to support employment growth and boost inflation. Monitoring this data is therefore crucial because of the significant impact it may have on monetary policy.

AUD, Australian 10, 2-Year Bond Yields Continue to Tumble on Trade War, Growth Prospects

On June 14, Chinese industrial production and retail sales data will likely occupy the spotlight in Asia trading hours, barring any unexpected market-disrupting developments. Following the G20 Summit, US President Donald Trump is expected to make an announcement by the end of the month on whether he will be imposing a $325 billion tariff against Chinese goods. Developments related to this policy measure will warrant the attention of all traders.

FX TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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2019-06-07 22:00:00

USD/CHF Collapse Eyes Yearly Open Support

Posted: 07 Jun 2019 10:03 AM PDT

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The US Dollar has plummeted more than 3.6% against the Swiss Franc from the yearly highs with price now targeting confluence support near the 2019 yearly open. These are the updated targets and invalidation levels that matter on the USD/CHF weekly price chart the close of the week. Review this week's Strategy Webinar for an in-depth breakdown of this setup and more.

New to Forex Trading? Get started with this Free Beginners Guide

USD/CHF Weekly Price Chart

Notes: USD/CHF has broken below 2018 trendline support with the decline now approaching a key zone of confluence support at 9828/39– a region defined by the 78.6% retracement of the 2019 range and the yearly open. Note that the median-line of a proposed pitchfork extending off the highs also converges on this zone and further highlights its technical significance.

Initial resistance stands at the highlighted trendline confluence just below parity with broader bearish invalidation now set to 1.0091. A downside break / weekly close below this key support zone is needed to keep the short-bias viable targeting 9716 and more significant support at 9588-9600.

For a complete breakdown of Michael's trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: USD/CHF has broken below a year-long trendline with the immediate focus on the 9828/39 support confluence- look for a reaction there. From a trading standpoint, a good spot to reduce short exposure / lower protective stops. Look for possible near-term price exhaustion on a test lower – ultimately, we'll favor fading weakness sub-1.0091. I'll publish an updated USD/CHF scalp setup once we get further clarity in near-term price action.

Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading

USD/CHF Trader Sentiment

A summary of IG Client Sentiment shows traders are net-long USD/CHF – the ratio stands at +2.42 (70.7% of traders are long) – bearish reading
Long positions are 4.7% higher than yesterday and 36.8% higher from last week
Short positions are 22.2% lower than yesterday and 54.0% lower from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CHF prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger USD/CHF-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in USD/CHF retail positioning are impacting trend- Learn more about sentiment!

—

Key Swiss / US Data Releases

Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Previous Weekly Technical Charts

Learn how to Trade with Confidence in our Free Trading Guide

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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2019-06-07 17:00:00

Gold Price Hits Fresh 2019 High after US Jobs Report

Posted: 07 Jun 2019 09:27 AM PDT

Gold Price Talking Points:

Gold prices completed their bullish falling wedge breakout move earlier today, hitting the wedge base target of 1346.61.
Now that the bullish pattern has played out, and that gold prices are more than 2% above their daily 21-EMA, the odds of a pause in the rally are increasing.
Even if the gold rally pauses for a few days, changes in retail trader positioning suggest that gold prices can still trade higher.

Looking for longer-term forecasts on Gold and Silver prices? Check out the DailyFX Trading Guides.

The start of June has rewarded precious metal bugs handsomely, with gold prices trading to a fresh 2019 high earlier today. Following the release of the May US nonfarm payrolls report, gold prices briefly eclipsed the February 2019 high of 1346.61, reaching 1348.13 on their way to their highest level since April 2018. Thanks to US Treasury yields diving to fresh yearly lows as well (and more US yield curve inversion raising fears of a recession), gold prices have proved well-supported by the increasingly friendly fundamental backdrop.

Gold Volatility Continues to Push Higher

One of the more important facets of the recent gold price rally has been how gold volatility has surged alongside prices. Whereas other asset classes don't like increased volatility (signaling greater uncertainty around cash flows, dividends, coupon payments, etc.), precious metals tend to benefit from periods of higher volatility as uncertainty allows gold and silver to glitter as safe havens.

GVZ (Gold Volatility) Technical Analysis: Daily Price Chart (June 2018 to June 2019) (Chart 1)

After hitting an all-time closing low on May 29, 2019, gold volatility (as measured by the CBOE's gold volatility ETF, GVZ, which tracks the 1-month implied volatility of gold as derived from the GLD option chain) has jumped back to its highest level since the first week of January 2019. No longer in a downtrend, gold volatility appears to have put in a base, and structurally, moving forward, should stay elevated for the foreseeable future.

Gold Price Rally is Long in the Tooth

With gold volatility looking like it is set to stay elevated over the immediate future, coupled with falling US Treasury yields and the immense topping potential for the US Dollar (via the DXY Index), the fundamental backdrop for gold prices has been most bullish it has been all year long.

Gold Price Technical Analysis: Daily Chart (April 2018 to June 2019) (Chart 2)

But the fact of the matter is that the predominant pattern governing gold price’s coiling range over the past several weeks was believed to be a bullish falling wedge. Wedges, regardless of the bullish or bearish variety, call for a return to the base of the pattern; in this case, the falling bullish wedge in gold prices called for a return back to the February 2019 (and yearly) high of 1346.61.

Indeed, after the weak US jobs report earlier today, gold prices were able to fulfill the move up the base of the bullish falling wedge; the breakout move triggered on May 31 has been completed. Traders should be cautioned the fulfilment of this pattern may mean that the gold price rally is due for a breather. As discussed earlier this week, the current technical environment for gold prices is similar to other times when rallies were cut short.

Gold Price Rally has Paused When This Happens

At the end of January 2019, we noted that gold prices had been beginning to behave in a manner that was indicative of previous short-term topping efforts. "Since the bottoming effort in gold began at the end of Q3'18, there have been three instances in which Gold prices have peaked in excess of +2% higher than its daily 21-EMA: October 3, 2018; January 3, 2019; and [January 31]."Another instance occurred since then, on February 19.

While considering the extremely small sample size – only four observations in total since the bottoming effort in gold prices began in Q3'18 – the one-week returns for gold after price moved in excess of 2% of the daily 21-EMA were +0.12%, -0.59%, -0.59%, -0.90%, or -0.49% on average, for the respective periods listed above.

As of Wednesday, June 5, gold prices had moved in excess of 2% of the daily 21-EMA once again. It still holds that the risk for exhaustion setting in again soon and cutting the rally short is increasing.

IG Client Sentiment Index: Spot Gold Price Forecast (June 7, 2019) (Chart 3)

Spot gold: Retail trader data shows 52.7% of traders are net-long with the ratio of traders long to short at 1.12 to 1. The number of traders net-long is 9.9% lower than yesterday and 26.2% lower from last week, while the number of traders net-short is 13.9% higher than yesterday and 90.9% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests spot gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current spot gold price trend may soon reverse higher despite the fact traders remain net-long.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

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2019-06-07 15:57:00

Dollar, Euro, Australian Dollar, and Gold Charts for Next Week

Posted: 07 Jun 2019 05:41 AM PDT

The US Dollar Index (DXY) is probing support lines which need to hold to keep the outlook for USD neutral to bullish. The Euro is pressing up against the upper boundaries of resistance, at a sort of make-or-break point which will have big sway on the DXY. AUDUSD is at big-picture wedge resistance and could be working on a short-term bearish pattern. Gold is trading near some pretty big long-term levels, what it does next could be significant for its broader outlook.

Technical Highlights:

US Dollar Index (DXY) probing support lines
EURUSD at upper-end of resistance zone
AUDUSD at resistance, short-term pattern to watch
Gold trading near multi-year resistance

See where our team of analysts see your favorite markets and currencies headed in the in the DailyFX Trading Forecasts.

US Dollar Index (DXY) probing support lines

The US Dollar Index (DXY) has been pressing down on support the past couple of sessions, but could still delve deeper into a trend-line, 200-day combo soon. It is preferred from a 'test the market's resolve' standpoint that a deeper test takes place. A larger test and pass or fail could offer up a strong backdrop for the next swing in the Dollar. With where we are on the chart next week could be a good one…

US Dollar Index (DXY) Daily Chart (building a wedge)

Find out where our analysts see the Dollar heading in the coming weeks based on both fundamental and technical factors – Q2 Dollar Forecast

EURUSD at upper-end of resistance zone

The Euro holds the DXY hostage here as it presses up against resistance. The single currency had a strong reversal on Wednesday which was mostly negated yesterday. But this still leaves EURUSD up against some solid trend resistance, price levels around 11320.

Bigger picture the grind has been long and persistent and while the market owes us nothing, the Euro is due for a sustained break in either direction. A strong push above the September trend-line into the mid-11330s may do the trick. If not, then look for a move lower to keep the Euro confined to a range until another attempt can be made on the lows near 11100 or back higher through the aforementioned resistance.

EURUSD Daily Chart (at resistance)

Find out where our analysts see the Euroheading in the coming weeks based on both fundamental and technical factors – Q2 Euro Forecast

AUDUSD at resistance, short-term pattern to watch

AUDUSD has a couple of noteworthy technical events to watch. Longer-term, it is testing the bottom of the descending wedge it broke a few weeks back. A successful hold below resistance may then go on to help form a well-defined bear-flag on the 4-hr chart.

A break of the flag to the downside will be required to kick Aussie lower, but the rejection at resistance and breakdown from a short-term pattern could make for an attractive trade in the not-too-distant future.

AUDUSD Daily Chart (wedge retest)

AUDUSD 4-hr Chart (bear-flag building?)

Find out where our analysts see the Pound heading in the coming weeks based on both fundamental and technical factors – Q2 Pound Forecast

Gold trading near multi-year resistance

Gold is at a major spot on the weekly chart, the top of a broad wedge dating back years. It has a good distance yet to go for a confirmed breakout (1375+) but if it does cross over it could certainly make for a major move higher. But before all of that we must respect resistance.

The other day a solid reversal bar was put in, but we may see some more testing of resistance before a turn down can develop. It's on the radar and should we see more bearish price action around current levels up to the mid-1360s, then a clean short set-up may present itself.

Find out where our analysts see Gold heading in the coming weeks based on both fundamental and technical factors – Q2 Gold Forecast

Gold Weekly Chart (top of wedge)

Gold Daily Chart (watching for bearish price action)

Resources for Forex & CFD Traders

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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2019-06-07 12:00:00

Dollar, Euro, Australian Dollar, and Gold Charts for Next Week

Posted: 07 Jun 2019 05:06 AM PDT

Technical Highlights:

US Dollar Index (DXY) probing support lines
EURUSD at upper-end of resistance zone
AUDUSD at resistance, short-term pattern to watch
Gold trading near multi-year resistance

See where our team of analysts see your favorite markets and currencies headed in the in the DailyFX Trading Forecasts.

US Dollar Index (DXY) probing support lines

US Dollar Index (DXY) Daily Chart (building a wedge)

Find out where our analysts see the Dollar heading in the coming weeks based on both fundamental and technical factors – Q2 Dollar Forecast

EURUSD at upper-end of resistance zone

EURUSD Daily Chart (at resistance)

Find out where our analysts see the Euroheading in the coming weeks based on both fundamental and technical factors – Q2 Euro Forecast

AUDUSD at resistance, short-term pattern to watch

AUDUSD Daily Chart (wedge retest)

AUDUSD 4-hr Chart (bear-flag building?)

Find out where our analysts see the Pound heading in the coming weeks based on both fundamental and technical factors – Q2 Pound Forecast

Gold trading near multi-year resistance

Find out where our analysts see Gold heading in the coming weeks based on both fundamental and technical factors – Q2 Gold Forecast

Gold Weekly Chart (top of wedge)

Gold Daily Chart (watching for bearish price action)

Resources for Forex & CFD Traders

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

2019-06-07 12:00:00

USDCAD, CADJPY Price Action Setups

Posted: 07 Jun 2019 04:29 AM PDT

Currency Volatility CAD Talking Points

CAD continues to gain ground vs USD
CADJPY Bearish Momentum Eases, Volatility Muted Ahead of NFP and CAD Jobs

Top 10 most volatile currency pairs and how to trade them

For a more in-depth analysis on FX, check out the Q2 FX Forecast

USDCAD | The Canadian Dollar continues to remain supported against the greenback as USDCAD tests support at 1.3350. Focus for CAD traders will be on today's employment report in which the headline is expected to show a marginal 8k rise following last months record rise. Alongside this, the NFP data will be release, which is likely to impact the pair, as such, 1-day implied volatility shows USDCAD ATM break-evens = 57pips (this means that options traders need to see at least 57pip of gains either side in order to profit).

USDCAD Technical Analysis

USDCAD Price Chart: Daily Time Frame (Oct 2018 – June2019)

CADJPY | Despite the NFP report and Canadian Jobs data, CAD volatility is relatively muted across major CAD crosses with the exception of USDCAD. Implied volatility for CADJPY shows CADJPY ATM break-evens = 39pips. The cross has bounced off support (80.50), breaking above the 81.00 handle to hover at intra-day highs as a bid in equity markets and crude oil has eased the bearish momentum in CADJPY, topside resistance is situated at 81.50 and 82.00.

CADJPY Price Chart: Daily Time Frame (Oct 2018 – June2019)

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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2019-06-07 11:25:00