Technical Analysis Oct.8th

by on October 8, 2014 8:40 am BST


EURUSD is currently trading just beneath the two-month down-trend at 1.2660, meaning the risks are heavily skewed towards a sell-off. In this case the first target will be the monthly S1 at 1.24, followed by the monthly S2 at 1.22 and even in a longer-term perspective—the 2012 low at 1.2040. But if the rally keeps developing, we will expect the supply at 1.28 to prevent further appreciation of the Euro.


Traders’ Sentiment
There is still no consensus among the market participants regarding the future of the single European currency—53% expect it to gain value and 47% plan to profit from its depreciation relative to the U.S. Dollar.


After 1.61 played an important role in evolution of the GBPUSD in September, it is now acting as a ceiling for the price. But if the bulls do not give in and continue to push the rate higher, the next potential reversal point will be only 100 pips higher—at 1.62. The resistance there should be enough to reignite selling, as it is implied by a cluster of studies: the three-month falling trend-line, weekly R1 and 20-day SMA.


Traders’ Sentiment
There have been no major changes in the distribution between the long and short positions open. While the former take up 60% of the market, the latter are in a minority with 40%. As for the orders, most (56%) of them are to sell the Sterling.


Despite the currency pair facing a number of supports yesterday, it nonetheless closed below the up-trend at 108.50, meaning the lower edge of the trading range in the medium term is rather 108. And if the latter level is broken as well, it may substantially complicate the situation for the bulls, since then USDJPY will be in a position to sink as low as 106, where the monthly S1 and 55-day SMA coincide.


Traders’ Sentiment
While the gap between the bullish and bearish traders widened compared to the previous report from 16 to 20 percentage points, the difference between the amounts of buy and sell orders became insignificant—10 after 32 percentage points.


Right now USDCHF is supported by the weekly S1. And if the things stay as they are, namely 0.9550 remains intact, the pair should be able to climb over the weekly PP at 0.9617. Then the U.S. Dollar will likely re-test 0.97. Otherwise, there will be a high chance of the price sliding lower, down to 0.9450, where the bears will be expected to be stopped by a dense demand area, represented by the up-trend, monthly PP and weekly S2.


Traders’ Sentiment
There are considerably more people who believe the U.S. Dollar is going to keep gaining ground against the Swiss Franc—63% of positions are long. As for the orders, the buy and sell commands are almost equal in numbers—48 and 52% respectively.