Analys från DailyFX
DAX Tech Update: Short-term Trading Levels Amidst the Chop
What’s inside:
- Top-side parallel overcome, but other resistance stands in the way
- Trading conditions remain choppy, leaving trading best for those with short-term holding periods
- Techs on the 2-hr chart examined
On Monday, we discussed slope resistance running off the 9/8 swing high. Yesterday, the DAX managed to close above it for the first time since it came into play, but hasn’t yet recaptured the trend-line off the June lows. Resistance in the 10640/700 vicinity also stands in the way of the market continuing the recent advance.
DAX: Daily
Created with Tradingview
Overall market direction is lacking, which means trading at this time is best left to those willing to operate off time-frames of only a few hours to a couple of days.
Dialing in on the 2-hour chart: A pair of trend-lines is extending lower. The first trend-line, which is immediately having influence on the DAX, comes in off the 9/22 high. The second trend-line, ~20 points above the first, goes back to the 8/15 swing high. There are also a couple of small swing highs in the current area from early in the month.
Immediate resistance presents the first hurdle for the market to overcome if it is to move higher, and until it does we will not view the market through a bullish lens. It doesn’t mean we are aggressively bearish, but we know all too well that buying into resistance (just as shorting into support) is generally a losing endeavor.
A move lower will bring in the trend-line off the big Deutsche Bank-induced gap-down day low on Sep 30. We will use that as initial support should it trade down there.
The convergence of trend-lines discussed brings to light the possibility of a wedge pattern reaching maturity with a little more time spent bouncing around between the upper and lower trend-lines. This would be a welcomed event given the nature of such patterns often times leading to sustained moves – one way or another.
For now, we will continue to keep expectations of large price swings tempered and utilize the current short-term landscape to shape our trading bias.
DAX: 2-hour
Created with Tradingview
Check out our Q4 forecasts for FX, commodities and indices.
—Written by Paul Robinson, Market Analyst
To receive Paul’s analysis directly via email, please sign 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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