Analys från DailyFX
FTSE 100 – Big Bottom & Top-side Levels Keep Market Constrained
What’s inside:
- FTSE 100 stuck between a rock and a hard place
- Resistance in the form of top-side intermediate-term slope
- Support comes in on lower long-term slope, turning points attached to the slope
What’s driving European stocks? Find out in our market forecasts.
When we last specifically discussed the FTSE 100 it was on the day of the election, and heading into the ordeal the market was set up for lower prices. But going into an event of this magnitude leaning too hard in either direction was risky – the outcome proved that much.
So, where are we now? The market is caught between a rock and a hard place – focus remains on bottom and top-side slopes. Looking slightly higher, the January/March/current line has been a real problem for the UK index (double reversal events during the week before last showed us that much). We’ll continue to respect this increasingly important slope of resistance until the footsie can convincingly overcome it and the 6/2 record high.
On the down-side, the 2013 to present trend-line is likely to help keep a bid in place on a break lower (at least initially). The long-term slope held the market down from January to April, but then turned into a big source of support on a decline last month. The line currently clocks in around 7410. Just below there, the peaks bottom which are connected with the trend-line will viewed as another solid source of support (~7393) should the market try and skate lower. We’ll call major support 7390/7410. It would require a stiff breakthrough for alarm bells to go off.
The trend is generally higher, and while risk sentiment is on semi-fragile footing at the moment we must respect the upward bias until we see a material shift in risk appetite. With that said, the FTSE might find itself bouncing around between support and resistance with continued lack of clarity before eventually coming to a resolution.
Heads up: An uptick in volatility may very soon be upon us – FOMC tomorrow, BoE on Thursday. See calendar for details.
FTSE 100: Daily
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—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
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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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