Analys från DailyFX

DAX Bouncing, but Has Work to Do to Turn Outright Bullish

Published

7 år ago

31 augusti, 2017

DailyFX

What’s inside:

DAX bouncing with risk, weaker euro (a correlation which might breakdown)
But has plenty of resistance ahead to keep it going
Choppy, indecisive trade could dominate

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Since Tuesday morning when global markets initially reacted lower on North Korea’s launching of a missile over Japan, we’ve seen the market view weakness as a buying opportunity. The DAX broke down to its worst levels since March, but has rebounded a bit. The breakdown came from a triangle pattern we were discussing as likely to lead to lower prices, but selling from the formation has proven to be a one-off event thus far.

While the market broke below an earlier-month swing-low on an intra-day basis, the break was somewhat recovered for a closing print just above the support threshold. So far the bounce is being driven by not only a broad rally in risk but also with the help of a weaker euro. The negative correlation between the DAX euro(trading in opposite directions of one another) has been significant, with the one-month correlation reaching below -90% during both July August. It’s also been the longest stretch of inverse correlation since the end of 2015, very beginning of 2016. Correlations are relationships which can fall in and out of love with little warning, and on that, while it is generally true the euro and DAX trade inverse to one another to one degree or another, risk is rising that the two could trade together at some point in the not-too-distant future. Bottom line, don’t get married to the correlation, but simply keep it in mind.

Turning to the techs-only, the DAX is nearing a trend-line running off the June record high and ‘head’ of a ‘head-and-shoulders’ formation which has acted as a technical guide for much of the past month. The trend-line is first up for the market to conquer, but even with a breach above we will need to see the area around 12300 overtaken to put wind in the sails for longs. That’s still quite a fair amount of distance away. Renewed weakness will bring back into play the weekly low at 11868 near the March low at 11850. Below there, not a move anticipated to take shape at this time, we could finally see the market trade down to the measured move target of the HS formation near 11600 and an actual level of support around the 11480-mark.

All-in-all, the DAX doesn’t appear poised to fall out of bed, but the top-side doesn’t yet look very encouraging. From a tactical standpoint, sluggish price action could continue to dominate as the market sorts itself out, and remaining highly flexible in both directions to then be the most prudent approach.

DAX: Daily

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—Written by Paul Robinson, Market Analyst

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Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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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You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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