Analys från DailyFX
S&P 500 – Short-term Trading Levels & Considerations
What’s inside:
- SP 500 holding up in record territory
- Defined short-term trading levels to watch
- Continuing to run with a generally bullish bias as long as support levels hold
Looking for a longer-term view on the SP 500? Check out our quarterly forecasts.
The market has been quiet so far this week, with the SP 500 treading water right around record levels. As we said yesterday, with volatility as low as it is it makes trading difficult, but not impossible. It needs to be accepted that volatility is low and in response to these market conditions we need to be more careful in picking our spots and lower expectations.
Last week the SP broke out from a triangle we had penciled in on the hourly time-frame. It didn’t lead to a huge up-move, but on the initial thrust the formation led the market up towards the measured-move target at 2408 before reversing lower a few points shy. The past couple of sessions we have seen the SP dip a little and hold support right around 2393. For a continuation-trade higher it will be key in the short-term for this level to hold, else we could see more weakness down into the 2080s.
Looking higher, a climb above 2304 is needed for a breakout, however; our interest doesn’t lie in trying to chase a breakout, especially in this low-vol environment. In the event of a breakout, a retracement and hold of support is the preferred approach for entering new longs.
Should the market fail to push higher and we see a clean break of 2393, we’ll have our eyes on the trend-line running up from the 4/24 gap-day low, and below there of even more interest is support around the 2080 mark. A clean break below 2080 will quickly bring a gap-fill scenario into play down to 2373. In the near-term, it looks unlikely we will see a fill of the French election-induced gap on 4/24. At some point this gap will get filled, but it may not be any time soon. We’ll touch on it should the market trade down into the gap, but it’s premature to discuss at this time.
SP 500: Hourly
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—Written by Paul Robinson, Market Analyst
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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.
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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