Analys från DailyFX
FTSE 100 Approaches Critical Support
Talking Points
- The FTSE 100 remains bearish but price is now nearing a major support level, namely the April low of 6060.
- The very short-term trend is bearish below yesterday’s high of 6283.
- Markit/CIPS UK Construction PMI for April is on deck today and will be followed by key reports from the U.S., such as ADP Employment Change and the ISM Non-Manufacturing Index.
At the time of writing, the FTSE 100 (CFD: UK100) maintained its bearish bias which has been controlling price since April 20 when it reached a high of 6432.
The last short-term high of importance is yesterday’s high of 6283 and the trend is short-term bearish below this high given that it’s the most recent swing high in the downtrend since April 20.
According to classical technical analysis and for the bearish bias to abate, the sequence of lower swing highs and lower lows would need to end.
Short-term support levels are yesterday’s low of 6158, followed by the April 7 low of 6108 and the April monthly low of 6060.
We note that when price is nearing a major support level such as the April low of 6060, price tends to turn choppy. Between late February and early April, the 6060 level supported the FTSE 100. Below the 6060 level, the March 10 low of 6006 is the next resistance point and is followed by the February 24 low of 5841.
Resistance levels are yesterday’s high of 6283, the April 27 high of 6344 and the April high of 6432.
One of the macroeconomic reports, which may affect the FTSE 100 this morning is the Markit/CIPS UK Construction PMI for April, and as per a Bloomberg survey, the index is expected to decline to 54.0 from 54.2.
This afternoon key U.S. data reports are on deck: the ADP Employment Change and April’s ISM Non-Manufacturing Composite. Please read today’s market update by Ilya Spivak, Currency Strategist, for more on today’s U.S. economic reports.
Our Stock Market forecasts for Q2 2016 are now live on the site. Download them for free.
FTSE 100 | CFD: UK100
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
— Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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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