Analys från DailyFX
DAX: Lift Higher Still Viewed as Counter-trend in Nature
What’s inside:
- BoE made an aggressive move, but had little impact on risk appetite outside of the UK
- Bounce in the DAX viewed as likely short-lived
- Important support and resistance levels outlined
On Thursday, the BoE cut rates to 0.25% from 0.5% (which was expected), but also expanded its QE program by another £60 billion (not expected) and left the door open for further easing measures. This gave UK stocks a shot in the arm, with the FTSE 100 responding by rallying from in the red to up 1.6% to finish the day, and undermined the pound by a couple hundred pips. The ‘euphoria’ was isolated, though, as the impact on risk appetite was not felt in any significant way in the rest of Europe and the U.S.
In yesterday’s piece, we took a look at the DAX and noted the bounce from short-term support as likely to be short-lived given the strong thrust lower to start the week and month and headwinds the index faces in the form of resistance, whether it be at 10265 (visible on intra-day time-frames) or a little higher on a retest of a very significant long-term trend-line, roughly in the mid-10300s.
The DAX is starting today off once again pressing up against the important short-term area around 10265. Should it begin to roll-over from here, we will look for a move back to support around 10100, and then down around 10k and 9900 on further weakness. If the DAX can take out the first area of resistance, though, we will turn to the 2015 trend-line around 10325/50 before looking for the market to stall and roll back over.
Volatility alert: Later in the session, at 12:30 GMT, the monthly U.S. jobs report will be released. Estimates are for the U.S. economy to have added 180k new jobs during July, while the unemployment rate is expected to tick lower to 4.8% from 4.9% in June. Average hourly earnings are anticipated to remain at a growth rate of 2.6% YoY. No predictions on this end, but if the jobs report deviates strongly from expectations then volatility can be expected across the risk spectrum.
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
He can be reached via email at probinson@fxcm.com ith any questions or comments.
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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