Analys från DailyFX
DAX: Range-bound Price Action Continues, More Bull Than Bear
What’s inside:
- Rangebound price action continues to dominate, looking like consolidation
- Trading levels on the top and bottom-side
- More time needed before a swing trade could develop, nimble traders can look to levels to fade until then
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Since last taking a look at the DAX on Wednesday, the market remains rangebound below the important 10800 area and not offering many additional clues as to which direction the index wants to move next. But as we said in our last post, horizontal price action below resistance, with no clear rejection at overhead levels, suggests a serious attempt to push above 10800 could be around the corner.
In today’s trade, selling pushed the DAX towards the low-end of the range, with 10576 penciled in as the lowest point (11/10 low). A break below this level of support wouldn’t be as significant of a technical event as the DAX taking out steadfast resistance surrounding 10800.
We’re not saying a drop lower couldn’t come with plenty of momentum, but just that the line-in-the-sand from the short-side isn’t as clear as the long-side.
On a drop below 10576 we will pay close attention to the strength of the move and whether the market can quickly rebound or not. The next meaningful level of support arrives at the trend-line rising up from the June low, currently below 10400. The next level of price support below that point, given the ‘chart-wrecking’ US presidential election reaction, isn’t until the 11/9 low at 10175.
On the top-side, there is a trend-line running off the 11/14 high around 10700 to contend with. This trend-line could become a part of a wedge. We’ll need more time to elapse before we have full pattern development, but a consideration worth keeping on the board. Above the trend-line, a thicket of resistance will keep pressure on the market until a close well above 10800.
At the immediate moment, traders will want to avoid getting chopped up in these market conditions. Very short-term minded traders can find scalps off levels. (i.e. – This morning we are seeing a bounce develop from within 3 points of the 11/10 low.) Swing traders will need to continue being patient.
DAX: Daily
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—Written by Paul Robinson, Market Analyst
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
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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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