Analys från DailyFX
FTSE 100 Looking to Support Levels to Stay on Course
What’s inside:
- FTSE 100 softens after springing to new record highs
- Looking to levels below for support in addition to potential bull-flag
- Bias is still generally bullish, but the market will need to find its footing at levels outlined
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When we last discussed the FTSE 100, it had just exploded to new highs with the help of solid global risk appetite following U.S. President Trump’s address to Congress and a weak pound. The index edged above the top-side 2013 trend-line and was squaring up against an upper parallel paired off with the trendline rising up from early February. Since turning lower the footsie is trading back below the long-term top-side trend-line and the old highs from January. The upper parallel proved to be pivotal, so we’ll keep a close eye on it should it come in play again on the way back up.
For now, we will be looking to a series of levels below for support. First the ~7330/00 area, where several intra-day highs took place during the third week of February. Looking closer at price action (1-hr chart), we can see the development of a bull-flag. The pattern needs to fully mature and eventually break the top-side parallel, but it could be a solid guide for new long entries.
Should we see the ~7330/00 area give-way to selling and the bull-flag configuration broken, then a larger decline could be underway, which may bring the 2/2 trend-line into play down near 7250. If the current technical structure is to remain pointed towards new highs in the very near future, then short to intermediate-term trend support will need to hold. A drop much beyond there won’t ‘wreck’ the trend, but start raising questions. Not far below the above-mentioned levels lies longer-term trend support by way of a trend-line extending up from the ‘Brexit’ lows (it’s been drawn in a couple of ways given the extreme tail caused by the vote, but both run in the same neighborhood at this time). In addition, the 2/24 pivot is in the area as well. A break below the June trend-line and swing low, an event not likely in the very immediate future, would be required to fully back off a bullish bias, and likely means we are seeing broad global risk aversion not isolated to just the U.K.
FTSE 100: Daily
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—Written by Paul Robinson, Market Analyst
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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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