Analys från DailyFX
DAX: Small ’Gap-and-Trap’ on Macron Victory
What’s inside:
- Macron landslide win leads to small gap higher, but quickly filled and then some; small ‘sell-the-news’ scenario
- DAX doesn’t have any resistance levels above as it trades in record territory
- Looking to previously overcome lines of resistance as potential support
Can the DAX continue its rise during the rest of Q2? See what our analysts have to say in our quarterly forecasts.
We have a winner in France. It was a landslide victory, with Macron receiving 66% of the vote and Le Pen only 34%. Major polls were generally showing a gap of 15-20% between the two candidates heading into the weekend, so while they were generally right, they weren’t as bullish on Macron as what the actual vote revealed.
As discussed in the weekly forecast, it looked probable that there might be a bit of a ‘sell-the-news’ scenario on a Macron victory given the sharp run-up we saw in the CAC 40/DAX leading up to yesterday’s outcome. This morning, the DAX gapped higher by about 40 points and quickly sold off to fill its small gap and then some. In France, the CAC 40 gapped to a lesser extent and is currently down the on the day by about 60 bps at the time of this writing. Buy the rumor, sell the news. Although, admittedly, on this end we were looking for a larger ’gap-and-fill’ situation on an initially euphoric response to the outcome.
Moving past the relatively benign reaction to the news and on the to the technical landscape, the DAX is strong as it sits in record territory. The two top-side trend-lines we had penciled as potential resistance have both been overcome. While minor in nature, had the market reacted to them with any kind of force we would have sat up and paid attention. Now that the August and February t-lines have been crossed we will look to them as support. Looking higher, nothing but space in terms of resistance. It doesn’t mean the market is ready to run away, it just means we don’t have any good levels or lines of resistance to lean on.
For now, we will continue to respect the trend and look to the market to hold support on dips, and until we see bearish price action set in we will run with this bias.
DAX: Daily
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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.
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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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