Analys från DailyFX
ASX 200 Technical Analysis: Have Bears Won a Long Arm Wrestle?
Talking Points:
- It looks as though the ASX 200 is attempting a downside range break
- However, caution is probably warranted
- That range is quite elderly and the timing looks a bit suspicious
What can retail traders’ decisions tell you about overall foreign-exchange trends? Find out here, at the DailyFX sentiment page.
After a long period of ASX 200 deadlock things at least seem to be moving – in a bearish direction. But “seem” is the operative term and it may be wise to wait.
My last technical look at the ASX 200 index focused I think understandably on the astonishingly narrow band traded by the Australian stock-market benchmark since last May. That tight, 200-odd point band had stood firm against all attempts to break it either way.
It still does but now the index is flirting quite seriously with the range bottom, more seriously indeed than it has at any point so far.
Currently at 5665.4, the 5649 level is June 7’s close and below that is June 8’s intraday low of 5626. Between them they constitute that bottom so the next few days’ closes will make rather interesting watching.
However, it’s surely worth pressing fundamentals into service and pointing out that current weakness stems in large part from a general diminution of risk appetite following North Korea’s missile launch over Japanese territory. This has seen a marked general retreat from equity in favour of perceived havens.
It seems just a little coincidental that the gravest threat to such an established range should come now, when all comparable assets are heading South too. We may of course be seeing the end of gridlocked ASX trade, and the bears may be winning the long arm wrestle. But the index could easily snap right back into range if risk appetite recovers and, if you are uncommitted, it could be best to wait and see whether it does.
Established ranges can die quite hard.
— 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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