Technical Analysis Sep.4th

by on September 4, 2014 8:16 am BST


Most traders are in a wait-and-see mode before this week’s major event, and the market remains unwilling to break any of the important levels. And while the outlook will most likely stay bearish in any case, we can either see an immediate breach of 1.31 (2013 Sep low), if the ECB eases its policy, or a surge to 1.33—2013 Q4 low), if the monetary authority decides to postpone additional measures to a later date.


Traders’ Sentiment
As one would expect, the market participants have been inactive lately—the distribution between the longs (58%) and shorts (42%) is exactly the same as yesterday. But the share of sell orders increased from 58 to 61%.



The Sterling stopped moving a day before the MPC rate statement, and for now it is underpinned by the monthly S1 level. However, this support will be unable to halt the currency from moving lower, in case the central bank is dovish. On the other hand, this year’s low at 1.6250 may have a good chance to prevent further depreciation of the Pound and instead help it to start realising the bullish outlook implied by the monthly technical indicators.


Traders’ Sentiment
Though the bulls are still in a majority, their advantage over the bears declined from 32 to 26 percentage points. Concerning the orders, unlike the situation 24 hours ago, there is no difference between the amounts of buy (53%) and sell (47%) commands.



As expected, the resistance at 105.50, represented by the 2014 high, proved to be a formidable obstacle by sending USDJPY back to the weekly R2. And the sell-off may extend even further. But at the same time there is a high chance the bearish momentum will come to naught before 104 is violated. There the weekly PP merges with the 2014 Q2 high. Another major demand area is at a round level of 103, where the July high is reinforced by the weekly S3.


Traders’ Sentiment
The sentiment in the SWFX market towards USDJPY remains neutral, as the difference between the bulls (47%) and bears (53%) is minimal. As for the orders, there are slightly more commands to buy the U.S. Dollar (56%) than to sell it (44%).



Though many of the daily and weekly studies were bullish, USDCHF failed to close above 0.92 and instead returned to the weekly PP level. The current pull-back may extend a little deeper, down to the 2014 Q1 high at 0.9150, but the currency pair will still be expected to re-test 0.9250 in the nearest future, being that the overall bias is to the upside as long as the up-trend and 100-day SMA at 0.90 are intact.


Traders’ Sentiment
While there is no real difference between the numbers of long (51%) and short (49%) positions open in the market, there are more traders willing to acquire the Greenback (56%) than to sell it (44%) against the Franc.