Analys från DailyFX
DAX Takes a Hit on Euro Strength, Broader Outlook Remains in Limbo
What’s inside:
- Post-ECB euro rallies strongly, DAX drops over 1%
- Head-and-shoulders top still no closer to triggering despite decline
- Trading outlook muddled, risk/reward still favors sidelines
What big factors are expected to impact the DAX Euro in Q3? Find out here!
The DAX didn’t like yesterday’s euro rally post-ECB. Not one bit. During the final three hours of the cash session the euro rallied sharply over 1% while the DAX fell over 1%. The one-month correlation between the currency and index hit an extreme of -92% (practically trading 1-to-1 inversely) earlier in the month, but is starting to diminish as it sits at -46% today (still significant). At any rate, sudden sharp moves in either direction in the euro are likely to spark a DAX move. The relationship isn’t something we spend a lot of time focusing on, but worth keeping in mind when there is a possibility for the euro to make a big move on an anticipated event. Generally speaking, while the correlation is more often than not negative, the euro and DAX do at times trade together, so be careful in overanalyzing the relationship.
DAX/EUR: 5-min
The question we asked a couple of days ago was this – “Will the developing HS top become a reality?” (*HS = Head-and-shoulders) It’s a question we can’t answer until the DAX trades below the neckline and into the April gap. It looks like a solid topping formation, but without a confirmed break the pattern is still in a development stage. If in the not-too-distant future the DAX doesn’t break down then an alternate path (bearish or bullish) may need to be considered.
In the shorter-term we are lacking clarity; low volatility is making sure of this. There are sellers above 12500 and support comes in near 12300. For now, risk reward generally favors the sidelines unless scalping, in which case there are still some intra-day moves nimble day-traders can take advantage of.
DAX: Daily
Paul conducts webinars every week from Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.
—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
Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.
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
- Chinese stimulus measures drive Brent up and out of the USD 69-71/b trading range
- Large drop in total commercial petroleum inventories
- Crude oil comment: Unable to rebound as the US SPX is signaling dark clouds on the horizon
- Crude oil comment: Not so fragile yet. If it was it would have sold off more yesterday
- OPEC+ can probably stomach a flat to slight contango market during a period where they lift production
-
Analys från DailyFX9 år ago
EUR/USD Flirts with Monthly Close Under 30 Year Trendline
-
Marknadsnyheter2 år agoUpptäck de bästa verktygen för att analysera Bitcoin!
-
Marknadsnyheter5 år ago
BrainCool AB (publ): erhåller bidrag (grant) om 0,9 MSEK från Vinnova för bolagets projekt inom behandling av covid-19 patienter med hög feber
-
Analys från DailyFX12 år ago
Japanese Yen Breakout or Fakeout? ZAR/JPY May Provide the Answer
-
Analys från DailyFX12 år ago
Price & Time: Key Levels to Watch in the Aftermath of NFP
-
Marknadsnyheter2 år agoDärför föredrar svenska spelare att spela via mobiltelefonen
-
Analys från DailyFX8 år ago
Gold Prices Falter at Resistance: Is the Bullish Run Finished?
-
Nyheter6 år agoTeknisk analys med Martin Hallström och Nils Brobacke