Analys från DailyFX
DAX Jumps Hurdle, Heading Towards New Record
What’s inside:
- DAX gaps above resistance and runs early
- Barring a reversal, new highs soon; but there is a key line of resistance not far above in record territory
- NFPs later today, sans a major deviation from expectations not likely to have a strong impact
Find out what’s driving global equity markets in our market forecasts.
On Wednesday, the sentiment we expressed regarding the DAX was one of patience, waiting for the range since mid-May to break – one way or another. The gap this morning came swiftly above recent resistance in the low 12700s; buying interest off the open was strong with about 70 points worth of gains added in the first twenty minutes.
General appetite for stocks is healthy.
Leading into the strong European showing this morning was Asia popping overnight, with the Nikkei tacking on 1.6% to finish out above the 20k psychological level and to its highest level since August 2015. Leading into that was a nice-sized rally in the U.S. yesterday, where the SP 500 tacked on 76 bps of its own to close at yet another new record high.
As long as the DAX can hold onto most of its gains from here through the end of the session, or even better yet, add to them, then it stands to continue forging on to new highs. But if it does the market will be in for a quick test of an influential line with its origins dating back to February. There are several inflection points, and most recently it acted as support in May. So even if the DAX breaks to a new high above 12842 it will have to muscle through the top-side slope in order to gain further traction.
Heads up: Later today, the US jobs report is due out at 12:30 GMT. Non-farm payrolls are expected to print 180k for May, while the unemployment rate remains unchanged at 4.4%. Whether this report will be a market-mover will depend on how large of a deviation from expectations we see. Even then, as often times is the case with data releases, the brunt of impact is likely to be felt more in FX/rates/precious metals. In any case, traders need to be prepared. See the economic calendar for release details.
DAX: 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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