Analys från DailyFX
FTSE 100: Important Trend-line Under Assault, H&S Top Maturing
What’s inside:
- The FTSE 100 is on the verge of breaking a steadfast trend-line
- ‘Head-and-shoulders’ top gaining clarity, but need to wait for a confirmed break
- Short-term traders may look to become more aggressive on confirmed break of June trend-line
In last week’s piece, we reiterated the importance of respecting the June trend-line until broken. While the FTSE 100 has lethargically held on to the line the index continued to hold. This morning we are seeing a push below the trend-line to start the day, but we will need to see a solid close beneath it before considering a valid break.
The price action in recent sessions has been difficult to say the least, with no clarity from one day to the next. The ‘head-and-shoulders’ (HS) pattern discussed not long ago as a possibility is still working its way towards becoming a reality. In search for better symmetry, more horizontal work will help bolster conviction should at some point the FTSE break the ‘neck-line’. But even if it is ready to break sooner rather than later, we consider the pattern to have developed enough for our backing as a valid formation.
With a confirmed break of the June trend-line there is even more important support to consider now that there is a classic technical formation in play. The ‘neckline’ running back to the 8/4 swing low will need to be breached on a closing bar basis, along with a drop below the 11/4 low at 6676. Should the HS top trigger, we will delve further into its implications.
However, until all this happens, the market remains above levels of support, and thus gives pause to swing traders becoming aggressively bearish. But, with one of those lines which has consistently held for much of the month on the verge of breaking, the shorter-term minded trader may have reason to become more aggressive in operations from the short-side until the next line of support is met in the vicinity of 6700/6676.
FTSE 100: 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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