Analys från DailyFX
DAX Technical Outlook: Pullback Then Higher
What’s inside:
- Fed raises rates, U.S. equities dip, no spillover into global markets today
- The DAX has only had one pause in the rally, waiting on a pullback/consolidation
- Continue looking to the November 2015 peak over 11400 as target
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The Fed raised rates 25 bps yesterday, in line with expectations, but had a somewhat hawkish outlook with three rate hikes expected in 2017. This sparked a decent amount of volatility in U.S. equities, with the SP 500 eventually settling lower on the day by over 80 bps.
Late day weakness in the U.S. isn’t spilling over to global markets in today’s trade. The Nikkei closed out relatively flat, the FTSE is off only fractionally so far, and the CAC and DAX are both higher on the session at this time.
Since rocketing off the 12/2 low and breaking out above a four-month long barrier surrounding 10800, the DAX has yet to provide a decent pullback to enter new longs on. Only a brief pause and test on Monday of the top-side trend-line running back to the April peak.
As previously noted, when looking to the left on the chart there isn’t anything substantial standing in the way of the market reaching the next point of resistance at the November 2015 peak (11431). We’re not far, but risk/reward is not favorable here. Not in in our book. The run has been huge for such a short period of time. Risk of a pullback continues to climb despite no visible resistance in the way. A short period of consolidation or shallow pullback will do the DAX some good.
On weakness we will first look to the April trend-line, a hold of this line could put the market in good position to reach the Nov ’15 highs. Risk/reward will look better, too. Just below the trend-line we will then look to the lows from Friday/Monday, both clocking in at approximately ~11140. At this juncture, it would require a sharp decline or key reversal day to damage our pullback then higher outlook. If we see no type of retracement from here and it is bulls on parade right up to noted resistance, we will watch how the market reacts and go from there.
DAX: Daily
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—Written by Paul Robinson, Market Analyst
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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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