Technical Analysis Jul.16

by on July 16, 2014 8:23 am GMT

EURUSD tests two-year up-trend

As suspected, EURUSD failed to cross the resistance represented by the monthly PP, down-trend and 55-day SMA. As a result, the currency pair is now testing the support at 1.3568/54, created by the monthly S1 and two-year rising line. Despite the demand here, the sell-off may continue, but should have trouble pushing the price beneath 1.35, which has proven to be a reliable level in the past (in February and June).

Traders’ Sentiment
The sentiment towards EURUSD remains neutral, as the difference between the shares of bullish and bearish market participants is currently negligible—only four percentage points (10 percentage points yesterday).

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GBPUSD rebounds from 1.7042

As soon as the price dropped down to the 2009 high, the bulls became active and subsequently pushed the Cable through some of the nearest resistances. Judging by the technical indicators, the rally is likely to persist both in the short and long terms. If the current tendency is preserved, the next strong supply area will be hit at 1.7248/46 (monthly R1), but there should be an up-move to 1.74 before any pronounced bearish correction.

Traders’ Sentiment
Just as yesterday and five days ago, the SWFX market seems to be strongly convinced that the British Pound is going to underperform—71% of traders have shorted the currency against the Buck.

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USDCHF soars from 200-day SMA

USDCHF has been experiencing difficulties lately, in the end it managed to decouple from the monthly PP and 200-day SMA at 0.8928/16 and commence a recovery. Now, the only resistance separating the spot price and 0.90 is the monthly R1 at 0.8985/82. However, according to the technical indicators, appreciation of the Greenback against the Franc should not be sustainable—four studies are giving ‘sell’ signals on the monthly time-frame.

Traders’ Sentiment
There are no large changes in the sentiment—most of the traders are bullish, namely 72% of them. However, the percentage of the buy orders placed on USDCHF has fallen noticeably since the previous report—from 66% to 52%.

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USDJPY extends rally

Although we were inclined to believe that the supply at 101.64/54 is going to stop the pair, the U.S. Dollar carries on strengthening relative to the Yen. USD/JPY should now probe the monthly PP and 55-day SMA at 101.84/78, which are in turn guarding the resistance at 102.08/02 (down-trend and 100-day SMA). A close above the latter point will most likely imply a test of the 200-day SMA at 102.50.

Traders’ Sentiment
There is a significant advantage of long positions over the short ones at the moment, being that the former constitute 75% of the market and the latter—merely 25% of it. For now performance of USD/JPY meets the expectations.

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