Analys från DailyFX
CAC 40 Bounces Significantly From Weekly Lows
Talking Points:
- CAC 40 Rallies From Weekly Lows
- Sentiment Figures Neutralize; IG Client Sentiment at -1.17
- Looking for additional trade ideas for equities markets? Read our 2017 Market Forecast
The CAC 40 is rebounding significantly this morning, and is now trading up +0.77% for Thursday’s session. European markets as a whole are trading higher, as equities have so far reacted positively to commentary made from various ECB policy officials this morning. CAC 40 traders should also note that there will continue to be considerable market risk this week, with the first round of the French presidential election will be held on April 23rd. CAC 40 leaders for Thursday include BNP Paribas (+3.07%) and Publicis (+2.86%). Top Losers for the Index include both Solvay (-1.50%) and ArcelorMittal (-0.33%).
Technically, even with today’s advance, the CAC 40 is trading in an ongoing short term downtrend. Early in today’s session the Index was rejected at its 10 day EMA (exponential moving average), found at 5,053.08. Traders should monitor this value, as the line will continue to act as a point of resistance if prices decline further. In the event that the CAC 40 rallies higher, a breakout above the 10 day EMA would signal a significant shift in momentum. A bullish move of this nature would allow traders to again set potential targets towards the standing 2017 high of 5,152.00.
CAC 40, Daily Chart with 10 Day EMA
Sentiment totals for the CAC 40 (Ticker: France 40) have neutralized, as the Index has backed away from its yearly highs.Currently IG Client Sentiment reads at -1.17, with 46.1% of traders long the CAC 40. This is a significant shift from last Tuesday’s reading of -1.89 and last week’s reading of -3.62. If the CAC 40 traders to new weekly lows, traders may look for these sentiment totals to eventually flip positive. In this scenario, traders may begin looking for the emergence of a new longer term bearish trend. Alternatively, if the CAC 40 finds support and again rallies higher, sentiment totals may remain negative and shift back to extremes before the conclusion of the trading week.
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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
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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
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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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