Analys från DailyFX
FTSE 100 – Confluence of Support Keeps Bears in Hibernation
What’s inside:
- FTSE 100 maintaining above big area of support after thorough test last week
- Might not see a big rally, but neutral to bullish bias warranted above support
- Top-side trend-line, record high are only thing standing it the market’s way
Find out what’s driving Sterling and the FTSE 100 in our market forecasts.
Monday’s update was titled, “Trading Between Key Lines of Influence”. With only a couple of trading sessions and price action having not moved much since, the FTSE is still on a mission of price discovery beyond noted lines of influence. Monday and Tuesday saw the market move up towards recent record highs and the top-side trend-line extending over peaks in January and March, but found a few sellers on approach.
If weakness sets in, the footsie won’t have far to drop before it should find sponsorship on the trend-line rising up from the April low; but even more important is the 2013 trend-line which was confirmed as support last week on the quick-hit in response to US politics souring. The long-term trend-line proved itself a problem from January through April before the FTSE finally broke on through. But it wasn’t just the breakthrough which captured our attention, it was the successful retest on a sharp drop which was also viewed as an important event. There was confluence with prior peaks as well, but all-in-all old resistance was proven to be a solid form of new support.
With that in mind, as long as the market can stay above this critical line of influence, then the market remains healthy from where we sit. Looking higher, the top-side trend-line (Jan/Mar) and record high at 7533 will be the hurdles to clear for higher prices to result.
Heads up: Later today the minutes from the earlier-month FOMC meeting will be released, and while it likely won’t cause any chaos, we can’t dismiss its potential impact on the market. Last month, the SP 500 dove sharply and in response we saw Asia and Europe gap lower the day after.
FTSE 100: 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.
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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