Analys från DailyFX
S&P 500, Nasdaq 100 Topping Formations in Play
What’s inside:
- SP 500 rounding top formation coming into view
- Daily close below 2405 could spark down-side momentum
- Nasdaq 100 testing neckline/trend-line resistance, resume topping formation
Will the SP 500 rise for an 8th consecutive quarter in a row? See our Quarterly Forecast here.
Last week, we described the SP 500 as being on the “brink of a breakdown”. And while it might have staved off an immediate breakdown with a bounce on Friday and yesterday, the technical posturing is still precarious.
Dialing in on the hourly chart, the sequence of higher highs during June followed by lower highs since the peak give the market a ‘rounding top’ look. There are a couple of trend-lines to keep in mind here as the market looks to put in perhaps one more peak before turning lower. The first one is the t-line off the 6/26 peak which the market struggled with yesterday, followed by the trend-line of the record high. Stay below those and the view of topping still remains firmly in place.
SP 500: Hourly
On a turn lower, the big level of interest for confirming a breakdown comes on a solid daily close below 2405. This is likely to set in motion a wave of selling. The slope extending upward from December may provide some support, but giving more strength to the developing topping formation and breach of 2405, the more likely scenario here is that it won’t be anything more than maybe a speedbump for shorts. The big level of interest arrives at the May low at 2352 and the February 2016 trend-line.
Daily
The Nasdaq 100 has a head-and-shoulders pattern underway, and while not the most symmetrical pattern with the weak left shoulder, it nevertheless does take on the look of a top. Whether you’re looking at the index through the lens of it sporting an HS top or not, it is testing an important trend-line, or neckline. If it is to abide by this as resistance then we should see a turn lower in the next day or so. On a turn lower, the NDX will quickly visit the May low at 5570 and upper parallel to the February 2016 trend-line. A break below both support levels could set in motion an aggressive move lower.
Nasdaq 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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