Analys från DailyFX

DAX Rolling Over, but Will the Developing H&S Top Become a Reality?

Published

7 år ago

19 juli, 2017

DailyFX

What’s inside:

DAX rolling over in recent days brings HS top one step closer to reality
Still need a break of the neckline for confirmation
Proximity of neckline to April gap makes set-up especially appealing with neckline trigger

Find out what’s driving the DAX and other global markets in our Q3 Forecast.

On Friday, we were discussing a potentially bearish path for the DAX via a head-and-shoulders topping formation. To end last week, the German index was trading at a resistance zone beneath 12700 created back in May and June, and it made for an ideal spot to look for the right shoulder of the pattern to develop. The past couple of sessions we have seen fairly aggressive selling from noted resistance, pushing the DAX below a minor zone of support surrounding 12500.

The pattern is maturing but not to the point of becoming official. Head-and-shoulder tops are often called out by many participants long before they mature; some of those trigger (trade below the neckline) while many others don’t. Aggressive traders will short on the turn lower from what is perceived to be a right shoulder and add to their position on a neckline break, while the textbook way to enter is to wait for a clean break of the neckline before establishing a position. An even more conservative approach is to wait for the first retest or bounce once the neckline is broken.

At any rate, the pattern is about 80% of the way towards coming to fruition, but we aren’t there yet. An appealing aspect to this set-up is the proximity of the neckline to the April French-election gap. Confluence between the two suggests we will see a thrust lower should the HS top trigger by trading below the neckline and into the gap. A gap-fill was a scenario we were leaning on previously with the DAX trading just above it, perhaps on the current move lower since last week we will see it finally fill, and if the topping formation goes full-circle then the gap-fill will only be a potential stopping point along the way. The height of the pattern points to a move towards 11700/600. We’ll delve further into targets once relevant.

For now, we’re in wait-and-see mode as a potentially clean set-up works its way from scenario to reality. It’s entirely possible we will be discussing alternate paths, bearish or bullish, should time pass without seeing the neckline break. Stay tuned…

DAX: Daily

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—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

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

You can receive Paul’s analysis directly via email bysigning up here.

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

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

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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