Analys från DailyFX
ASX 200 Technical Analysis: Pick Your Downtrend With Care
Talking Points:
- The ASX 200 is just where we left it last week
- That means its broad range is still with us too
- However, that range conceals to some extent an enduring downtrend which has yet to break
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In many respects the ASX 200 is exactly where I left it at my last technical look of exactly a week ago.
The broad range which has been in place since the index retreated from its 2017 high of 5962 on May 1 still endures. On a daily-close basis that range is bounded to the North by June 14 and 19’s 5809 and to the South by June 7’s 5648. There has been a handful of intraday probes outside the range, but they look spurious and can be safely excluded from consideration.
Momentum indicators suggest that the market is not strongly overbought, nor yet oversold, and even the pennant formation we looked at last week is still with us.
That’s usually a consolidative formation so it’s presence suggests that this is an index yet to make up its mind. As if we needed more proof of that. So, given all of the above, the inescapable truth is that for all its meandering the ASX 200 remains stuck in a downtrend from that May 1 peak.
The only question is how embedded that trend is at the moment. Now, if we’re strict about it and draw a trendline taking in all possible intraday points, we get this:
Here the bulls seem to be in trouble with the index well below the line and showing no sign of the guts needed to tackle it. However, apart from the May 1 peak, this trendline really only rests on a single intraday high – that of June 29. That need not make it an especially worthless indicator but, all the same, I think we have some scope to ignore it if we like.
The trendline below would seem to enjoy a bit more justification in terms of closing and intraday points It shows the index in a rather better light – i.e. a lot closer to an upside breakout. However, we mustn’t get too far ahead of ourselves.
A test of the range bottom remains the most likely eventual outcome of current trading action. That is unless the ASX can bring itself to break convincingly above a downtrend which is pervasive no matter which actual trend-line you find most convincing.
— 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.
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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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