Analys från DailyFX
FTSE 100 Goes from Bull to Double-top in One Fell Swoop
What’s inside:
- FTSE 100 on the verge of confirming a double-top formation
- A close below the 2016 trend-line, and June low will be an important event
- Initially targeting 7100 in the event of a technical breakdown
Find out in our Q3 Forecast what’s driving the FTSE 100 Sterling this quarter.
A week ago, when we last looked at the technical posturing of the FTSE 100, we were discussing the turn higher it was making towards new record highs. It had been a choppy market to trade, but overall the trend since last year has been quite clear with higher highs and higher lows marking a generally healthy market.
The last 2 ½ days (we could still have a reversal higher today) has been as clean and swift of a move as we have seen in months. An uptick in volatility across the risk-spectrum is upon us, a welcomed event for traders (for investors, not so much). What does this mean for the FTSE? The down-move could be of importance, because that sequence of higher highs and higher lows extending back to last year is under threat of being turned on its head. The trend-line rising up from the February 2016 low passing under the June/’Brexit’ low is also on the verge of getting cleanly broken (trading well below now on an intra-day basis, need to see where the market closes before calling it an official break).
A clean break of the 2016 trend-line and a decline below the late-June low at 7302 would mark a lower low from what could amount to a double-top earlier this week. Should that come to fruition it would indeed be an important development, one kicking off a trend towards lower prices as the lower-low would also constitute the break of the neckline of the double-top. There is the 200-day not far below the June low, but by then it may be nothing more than a speed bump for shorts as the technical picture will have already become tilted towards risk aversion.
The key to a bearish thesis is a strong daily close below both the 2016 trend-line in addition to the June low before getting too ‘beared up’. But should we see that then the 7100-line is a good spot to look for the footsie to decline to before possibly finding buyers. The measured move target (based on height of pattern) for the double-top pattern is around 7050.
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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