Analys från DailyFX
Technical Analysis: ASX 200 Must Top Bumping Along the Bottom
Talking Points:
- Australia’s ASX 200 index has regained an established uptrend
- But it hasn’t done so very convincingly
- It will need to regain current range tops to convince, perhaps at the very least
It’s possible that ASX investors are contemplating a sigh of relief.
Why not? The broad Australian equity benchmark has managed to creep back above a quite well-established uptrend line, as can be seen from the chart below:
If it can go on to manage a weekly close above the line then the week’s slip below it will look like a spurious blip.
The uptrend was established on March 22 and had held since then until Tuesday of this week when the ASX slipped below it. However, the price action since failed to confirm that brief rejection and the index has regained the path higher.
So that’s that then? Well, not quite.
Even though the uptrend is still just about in place, it’s surely notable that the index hasn’t mounted a challenge to the upper boundary since April 11, and didn’t manage to get there even then. This picture gets even more troubling when we look at the longer-term uptrend in place since last November:
In one worrying respect this uptrend is the macrocosm of which the chart we looked at first is the microcosm. Here again we see a channel which, although just about in place, hasn’t been challenged to the upside for rather a long time. In this case since January 9.
And, as you can see, this week’s slide also breached the bottom of this, rather more significant uptrend too.
In short ASX bulls seem to be doing enough to hang on, but not enough to convince. If the index can’t spend a bit more time at least trying for the top of these channels, then it looks as though a break lower has to come.
That’s going to mean a serious try at current range tops near 5961. A consolidation above these is becoming an ever more urgent necessity for those with hopes of more upside.
— 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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