Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD is stuck near 1.0970
“There could be some sudden moves though as small orders can move the market unpredictably. Volatility tends to increase towards the end of the year.”
- FXPrimus Europe (based on Reuters)
Pair’s Outlook
During the next few days EUR/USD is projected to develop sideways, owing to lack of fundamental drivers and low trading volume. The latter continued to fall down for a seventh consecutive day on Friday of the previous week when the trading session was very short. For the moment the pair is placed between the weekly pivot point (1.0932) and 50% Fibonacci retracement of an Oct-Nov downtrend (1.1008). Without any shocks, the cross is highly likely to act within these boundaries in the next 24 hours.
Traders’ Sentiment
There are more bears coming into the SWFX market, as their market portion increased from 56% to 57% since Thursday of the previous week. Meanwhile, 100-pip long pending orders gained ground over the weekend and rose up to 55% by Monday morning.
GBP/USD prolongs trade within the falling wedge
“Given a lack of fresh trading cues about the U.S. economic fundamentals, it’s hard to assume a further dollar selling.”
- Analyst at a Japanese brokerage house (based on Market Watch)
Pair’s Outlook
The British currency ended last week with another rally, rebounding from intraday low and, thus, erasing all previous week’s losses. Today the Sterling remains under the risk of edging lower, as technical studies suggest with their bearish signals. The closest level to stop the dips is located at 1.4899, namely the weekly PP; meanwhile, the immediate resistance lies around the 1.50 major level. However, due to a rather quiet day on the market in terms of fundamental data, the Cable could remain in limbo circa 1.4915.
Traders’ Sentiment
A relatively large part (66%) of traders retain a positive outlook towards the GBP/USD, compared to 68% last Thursday. At the same time, the portion of buy orders declined fro, 64 to 59%.
USD/JPY attempts to rebound from a fresh two-month low
“If we are correct with our call for a more challenging Late Cycle investment environment, expect the JPY to enjoy many more days similar to those seen in the middle of August when it looked like the PBOC was de-valuing the CNY.”
- ING (based on FXStreet)
Pair’s Outlook
As was anticipated, the USD/JPY dropped lower through the end of the previous week, after the head of BoJ stated that further QQE in Japan is unlikely. As a result, the Greenback reached a new two-month low against the Yen, eager to recover from these losses today. A correction is possible, but the weekly pivot point is providing resistance at 120.57. Meanwhile, the Bollinger band and the weekly S1 form a support cluster around 119.70, while technical studies indicate another slump is due. Nevertheless, a correction might prevail after the pair plunged for six consecutive days.
Traders’ Sentiment
Market sentiment keeps improving, as 65% of all positions are short (previously 68%). The share of buy orders edged up from 49 to 59%.
Gold remains calm as trading volume slumps
“As it is a holiday shortened week, I don't think we would see much action. Having said that, we could see some sharp moves because of the paltry liquidity in markets.”
- a precious metals trader in Hong Kong (based on CNBC)
Pair’s Outlook
In the run up to Christmas holidays gold recovered past 20-day SMA to close at 1,075. As the volume of trading kept declining, volatility of price changes was quite insignificant. Given that there are no major statistical events throughout a new week, we foresee the bullion to develop in a horizontal trend by using the weekly pivot point and 20-day SMA (1,072/73) as key anchors. For the bulls, an extra supply is offered by the Nov-Dec downtrend at 1,077. Therefore, longer-term perspectives for January are still skewed to the downside.
Traders’ Sentiment
The total number of bullish open positions has been steady since Wednesday of last week. Advantage of short market participants is 10% at the moment, as they are keeping 55% of all trades versus 45% for the bulls.
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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