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Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

2015-01-09 21:08:00
Jamie Saettele, CMT, Sr. Technical Strategist
Share:
  • EURUSD first long term bearish breakout attempt
  • AUDUSD small range weekly reversal at long term support zone
  • USDJPY wider consolidation could materialize

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EUR/USD

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.”

-EURUSD has now taken out the 2012 and 2010 lows. Only the 2005 low remains before ‘free-fall’ territory towards the 61.8% retracement of the rally from the 2000 low near 1.12. Given insanely one sided sentiment for an extended period of time however, this first attempt at the 2005 low may fail and give way to a much needed countertrend move.

-A number of calls for parity have been published recently. While the long term pattern suggests an eventual print near .90 (in 2016 or 2017), the sudden aggressively bearish calls come just after a record small speculator short position and record open interest in euro futures was recorded in November. The same COT profile was evident in May 2012, before the EURUSD bottomed in July. Aggressive forecasts are often published when it’s popular to do so, which means that the trend is embedded in the public consciousness to the point of extremity. The path to .90 or so won’t be smooth.

GBP/USD

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“A period of congestion may be in order as price has bounced from near the 50% retracement of the advance from the 2013 low but the drop under 1.6050 produces a pivot high on 9/19 and allows one to draw a downward sloping channel.”

-Like EURUSD, GBPUSD is at a long term support and this is a good spot for a rebound.

AUD/USD

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-“AUDUSD was unable to hold a long term parallel. The risk is for lower prices with the May 2010 low at .8067 and the 2005 high at .7986 of interest as supports”.

-AUDUSD dipped as low as .8031 this week, which is within the .7927-.8067 long term support zone (2010 low to 50% of rally from 2001 low with 2004 and 2005 lows in between). A small range weekly key reversal is present, which may set the stage for a recovery.

NZD/USD

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

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-NZDUSD is bouncing from the October 2009 high but one can’t help but notice that a major double top is possible with a target of .5898. That would trigger on a drop below .7370. Near term, consolidation since September could be taking the form of a triangle or flat.

USD/JPY

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-“USDJPY has reached touched its 20 DMA for the first time since late October. Conditions are much more extreme than they were last year at this time but the 20 DMA propelled USDJPY higher last December before the big January decline.”

-USDJPY held up into the New Year and said January decline is underway. A sideways pattern could take hold between roughly 117 and 120.

USD/CAD

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-“USDCAD has propelled higher and is probably headed into upper parallels. Levels of interest on the upside are 1.1666 (Fibonacci) and 1.1723 (June 2009 high).”

-USDCAD took out both mentioned levels and is now testing the 2007 high and major upper parallel (the 61.8% extension of the 2007-2009 rally from the 2011 low is at 1.1882 as well). If a pullback is going to materialize, then it likely happens from here.

USD/CHF

Weekly

Proliferation of EURUSD Parity Calls Indicates Sentiment Extreme

Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0

Automate trades with Mirror Trader

-“USDCHF has traded into median line support and former congestion (.9300-.9430). Start looking higher again. .9580 is resistance within the range and .9400/30 is support. A target level in the event of a new high is .9750.”

-USDCHF exceeded its .9750 objective and has continued into a line that extends off of the 2008 and 2010 highs. The line that extends off of the 2005 and 2008 highs is at about 1.0300. Bottom line; here to 1.0300 is resistance for a pullback.

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