Analys från DailyFX
S&P 500 Trading Outlook: Price Sequence in View
What’s inside:
- SP 500 isn’t providing much for the swing-trader at this point, but…
- A technical formation could give the very short-term minded an opportunity
- Levels and lines of importance outlined
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On Friday, we touched briefly on the potential for the compression in volatility in recent months to lead to a period of volatile trading ahead. Volatile trading is usually synonymous with ‘risk-off’. But before we get too excited about an uptick in broad-scale volatility we need to see price action support the notion of gyrating markets, something we have yet to see. Yesterday, the SP and Dow both closed to new record highs, while the Nasdaq 100 just shy of fresh record levels.
The trend is up, no denying that, but risk/reward for new longs at this juncture is not desirable; but shorting into new highs isn’t an attractive approach either. From this seat, it leaves us in a state of limbo for opportunity beyond very short-term time horizons.
There may be something for the short-term trader to work with on the hourly chart, as an expanding triangle (aka ’reverse symmetrical triangle’ (RST) or ‘megaphone’) has developed through the sequence of lower lows and higher highs. The expansion in price swings (as small as they may be) suggests growing instability and a potential inflection point. If the formation is to lead to a downturn, then the SP should turn lower starting as soon as today. If the market begins to pull off, momentum will be key; should the SP begin to decline but hold shortly thereafter, then the pattern may be in to fail as a signal of a short-term top and another leg higher could soon develop. The lower parallel extending up from the Feb 8 swing low will be viewed with interest upon any test we could see here shortly; a break below may spur the selling needed to send the market towards its first area of support in the vicinity of 2355/2351. A break below support would put the topping pattern in full swing (we’ll touch more on that later should it become relevant).
SP 500: Hourly
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So, while volatility is low, and generally speaking there isn’t a good swing-trade out there at this time, traders with very short-term time horizons may soon find some edge to work with.
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—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
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.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
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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