Analys från DailyFX
DAX: Major Breakout in Progress
What’s inside:
- The DAX moved to its best levels of the year on the open
- A solid close above peaks would be a big positive, while…
- A failure back below quadruple peaks would be a short-term negative
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Yesterday, when we looked at the DAX we made note of the break outside of the channel running lower off the 11/14 peak, and as long as it stayed above the upper parallel it was poised to make another attempt at major resistance around the 10800 mark. Yesterday was a solid showing, and with that the market is trading above an area this morning it has been unable to push through on four prior attempts since August.
One of two scenarios will pique our interest.
The first, and most probable scenario at this time, is if the DAX holds on to this morning’s gap and puts in a strong daily close above all resistance (10828 is the highest point). With this outcome, the preferred plan of attack is to wait for a pullback before entering long, as the market has already made a substantial move since Monday. This could unfold as a retest of prior resistance and hold as support in the 10828/10750 vicinity, or a period of consolidation in breakout territory. Given the significance of breaking such a strong barrier and the general uptrend since February, a sizable move could unfold in the weeks ahead. The only minor level we can see is a top-side trend-line back to April in the area of 11130/50. Beyond there, nothing significant stands in the way until the November 2015 peak at 11431.
The less likely scenario, is if the DAX fails this morning’s 100+ point gap to close back below the prior peaks. This would demonstrate a rejection by the market to sustain new levels. In the event a reversal day takes shape our bias in the short-term turns negative. Resistance while broken on an intra-day basis, at least for now, will have been validated once again on a daily closing basis..
DAX: Daily
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Heads up: The ECB has a monetary policy meeting tomorrow, and while there are no expectations for any changes to be made, the policy statement and press conference with Mario Draghi could stir up volatility.
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—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at @PaulRobinonFX.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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