Analys från DailyFX
FTSE 100 Fortifies Important Support, but Has Big Test Ahead
What’s inside:
- FTSE 100 attempts to break major support following BoE, but holds
- Short-term trend-line in way, but more formidable resistance lies not far ahead
- Key bottom and top-side lines keep market in range-bound environment
What’s driving the FTSE 100 and British pound? Find out in our Trading Guides.
On Thursday, when we looked at the FTSE 100 prior to the outcome of the BoE meeting it was pressing down near the major support zone we’ve been discussing surrounding 7400. With a couple more voting members turning in favor of a rate hike, a less-dovish vote of 5-3 vote in favor of staying pat on 0.25% sparked a rally in sterling and helped push the footsie below the 2013 top-side trend-line and peaks dating back to early March. The FTSE found some sponsorship, though, on an attempt to break significant support, and managed to close the session above this key area. Which is what really mattered – the close. We’ve seen a very nice rebound in the past day-and-a-half since. Once viewed as major resistance (2013-top-side t-line turn points associated with it), it’s now proving its worth as a major source of support. As long as the market can stay above the Thursday low at 7378, at the least the market will hold a neutral stance for the foreseeable future.
Trouble lies not far ahead, though. First off, a minor trend-line running off the record high is currently in the way. But the more important area of resistance comes in on an advance towards record highs. The January to March top-side trend-line we’ve discussed at length here, will once again likely prove to be a challenge to overcome. A close above this important line of resistance and the 6/2 record high at 7599 will be required to clear an obstructed path in record territory. At this time, confidence is low we will see strong momentum develop in either direction; range-bound market conditions seems the most likley scenario until the market can sorts itself out.
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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