Analys från DailyFX
ASX 200 Technical Analysis: Bounce Keeps 6000 in Sights
Talking Points:
- The ASX 200 has risen strongly since falling for three days straight last week
- The point at which it bounced is interesting
- 6000 beckons, but staying there will be hard
What will drive trends for the ASX 200 and other global equity indexes through mid-year? See our forecast to find out!
The siren call of the 6000 level still rings out for the ASX 200.
About a week ago the index bounced. Three days of falls took it down to the 5802 level before bulls stepped back in.
Here is that bounce:
So what? Well if we take a step back we can see that the bounce came in at an interesting point. It was just about bang on the lower bound of a rising channel which has held since mid-November 2016. That’s quite significant.
Rising channel limits losses
The Australian equity benchmark has since risen for four straight sessions and, at the time of writing – Thursday’s Asia Pacific morning – looks set for a fifth. These gains have almost wiped out the losses from the falls which preceded them.
And, for as long as this channel remains unbroken, then ASX bulls can look forward to an assault on the 6000 level. It’s now fewer than 100 points distant after all.
The bad news for them is that a successful one will be fraught. The index has not managed to consolidate above that level for very long since 2007. The charge upward in that year took it up to all-time record highs.
But its last flight into the rarefied atmosphere around 6000 was more recent and much shorter. Indeed it only lasted three months in early 2015 before asphyxia set in. The long, ensuing struggle for breath took the index all the way down to the 2016 lows of 4707.
So, the problem now is not that the ASX can’t reach 6000. It probably can. The problem will be investors’ memories of what happened the last time it did. They might make consolidation above that level a big ask with plenty of players probably all-too ready to take profit up there.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
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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