Analys från DailyFX
DAX 30 Trades Lower As Energy Shares Take a Hit
Talking Points
- The share price of energy producers E.ON and RWE AG have taken a hit and are subsequently pulling the DAX 30 lower.
- German factory orders, out this morning, declined by 1.2% MoM vs. prior expectations of a 0.3% gain.
- The next level of support for the DAX 30 is the March 10 low of 9400 followed by the February 24 low of 9122.
- Eurozone Retail Sales and ISM Non-Manufacturing are on deck and may affect the DAX 30.
The DAX 30 (FXCM: GER30) is lower by 1.62% at the time of writing. The biggest losing sector right now is the utilities sector, with firms such as E.ON and RWE AG, both of which are involved in energy production, suffering.
The softness in the energy shares may potentially be linked to the softer crude oil price, which the business press linked to the softness in Asian stock markets overnight. We note that the biggest losing sectors in key markets such as the FTSE 100 are also Energy shares and Materials (commodities).
German factory orders, out this morning, declined by 1.2% MoM vs. expectations of a 0.3% gain. Year-on-Year factory orders are up by 0.5% vs. the 2.2% expected.
The next level of support for the DAX 30 is the March 10 low of 9400 followed by the February 24 low of 9122. Yesterday’s high of 9903 is a short-term resistance level, while the March high of 10,120 is a stronger resistance level.
Eurozone Retail Sales and ISM Non-Manufacturing
Eurozone retail sales are due this morning and expected to show a YoY growth of 1.9%, a slightly slower pace than the 2% in January. This may affect the DAX 30.
In the afternoon, we can look towards U.S. Trade Balance and ISM Non-Manufacturing reports, with the latter likely grabbing most of the attention given that it provides an insight into the important U.S. service sector. Economists project the ISM Non-Manufacturing sector to have gained to 54.1 from 53.4.
Our forecasts for Q2 2016 are now live on the site. Download them for free.
DAX 30 | FXCM: GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
— Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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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