Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD ready to violate 100/55-day SMAs
“When risk sentiment improves, the euro falls and the Australian dollar rises, it’s a classic case of risk-based pattern.”
- Mizuho Securities (based on Bloomberg)
- Pair’s Outlook
Yesterday EUR/USD failed at the 50% Fibonacci retracement of the Jul-Aug uptrend around 1.1260. The pair therefore slumped down to the 200-day SMA 1.1170, while a decline is continuing on Thursday. Penetration of both 100 and 55-day SMA can be expected, taking into consideration bearish daily technical indicators. Meanwhile, very soon we are going to observe all 55, 100 and 200-day SMA crossing each other. The 55-day SMA is already testing the 100-day SMA to the upside, which implies a change in sentiment towards more positive momentum in overall development of EUR/USD.
Traders’ Sentiment
The share of bulls on the market decreased from 53% to 51%. In the meantime, pending orders in 100-pip range from the spot are still equally divided between bulls and bears.
GBP/USD remains under pressure
“The case for UK monetary policy to tighten regardless of the (Fed's) dithering is as clear as a bell. They won’t rush.”
- Societe Generale (based on Business Recorder)
- Pair’s Outlook
The Sterling struggled to appreciate against the US Dollar for another day, retesting the 23.60% Fibonacci retracement. The pair extended its decline for the fourth consecutive day, but remained rather far from the immediate support level. As no significant area was breached yesterday, the outlook remains bearish, despite other potential market movers being present. The 23.60% Fibo keeps providing resistance, while the Bollinger band is supporting the Pound from below, now bolstered by the weekly S1.
Traders’ Sentiment
Bulls retreated today, as 61% of all positions are now long (previously 63%). At the same time, the number of orders to acquire the Sterling also declined, from 58 to 55%.
USD/JPY makes head against the tide
“While today’s Tankan was not as bad as most had feared, it nonetheless corroborates other signs that Japan’s economic recovery has ground to a halt.”
- Capital Economics (based on WBP Online)
- Pair’s Outlook
The Greenback managed to rebound yesterday, with the upside volatility reaching the weekly PP at 120.33. Even though technical indicators retain their bearish signals, the US Dollar is likely to extend its gains today. However, with the beginning of the new month, the monthly PP shifted to the 119.93 mark, which is providing resistance quite close to the opening price. However, the USD/JPY has already pierced the two immediate resistances and is on the verge of piercing the third one and prolonging its rally, amid rising concerns of further easing from the BoJ.
Traders’ Sentiment
More than two thirds (70%) of traders are now long the Buck, whereas the share of purchase orders declined from 44 to 40%.
Gold closes below 1,115 and shifts attention to 1,100
“Gold prices came under pressure with upbeat U.S. economic data.”
- ANZ (based on CNBC)
- Pair’s Outlook
Gold continued to under-perform on Wednesday, while prolonging the period of daily losses to four consecutive working days. Moreover, the metal closed below both 55-day SMA and 23.6% Fibonacci retracement of the Aug-Sep downtrend, meaning that outlook is deteriorating. We expect the core bearish attention to be focused on the major 1,100 level, which is reinforced by the long term downtrend and lower Bollinger band. Intermediate support is represented by the weekly S2 at 1,105. Despite that, daily studies assume gold is oversold and a rebound is approaching.
Traders’ Sentiment
Distribution between bullish and bearish market participants at the SWFX market has improved substantially in course of the previous trading session. At the moment the former are holding 52% of all open positions, up three percentage points on a daily basis.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
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