Analys från DailyFX
S&P 500: Unofficial End of Summer is Here, Price Movement Set to Pick Up
What’s inside:
- Challenging market conditions should change as market participation returns
- Bull flag developing within construct of rising parallels
- Benefit of the doubt with the bulls still, but break of key levels would quickly change that
The SP 500 (FXCM: SPX500) has been a challenging index to trade since around the middle of July, as summer trading conditions and exhaustion post-Brexit hit the market. That is set to change with the most volatile period of trading for the year upon us. The fall is typically one of the more exciting times of the year as trading volume and volatility rises, even if the market remains strong and no major risk-off event unfolds. The Labor Day holiday in the US (observed yesterday) is the unofficial end of summer as market participants return back to their desks during the week or so after.
The current technical structure going back to the late June lows continues to remain pointed higher, despite the lack of direction in recent weeks. We should soon see a resolution of the horizontal price action as volume picks up.
Giving the uptrend into record high territory the benefit of the doubt, the sideways chop is currently viewed as a consolidation period before another leg higher. The price action over the past three weeks is taking the shape of a bull-flag on the verge of breaking.
The bull-flag has been developing within the construct of a differing angled set of parallels which entails all of the chop going back to the middle of July. A break higher will likely find resistance at the upper parallel in the 2205/10 vicinity.
Should the market roll over from here, we will be on alert for a new closing low below the Thursday low at 2156, and more importantly the 8/2 low at 2147. A break below the latter of those two levels would usher in the likelihood of seeing a decline below the old record high in 2015 at 2137 and expose the trend-line off the Feb 11 retest low.
Until the market can break free in either direction in the coming days, we will continue to patiently wait. As stated earlier, though, the trading should begin to pick up as we head further into September and opportunities are likely to begin presenting themselves in larger numbers than in recent weeks.
Find out what make characteristics profitable traders have in our free trading guide, “Traits of Successful Traders.”
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at probinson@fxcm.com with questions or comments.
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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