Analys från DailyFX
FTSE 100: Record Run Stalls, Market Conditions Set to Change
What’s inside:
- FTSE 100 snaps win streak
- High (so far) comes at top-side confluence of trend-lines
- Looking for the market to soften a bit here, consolidation period at the least
See our analysts’ Q1 forecasts on our Trading Guides page.
After fourteen consecutive sessions of gains for the FTSE 100, the index started the week as a loser, and we’re seeing some minor selling in the early part of today’s session. It’s been an incredible run, with most of those positive days coming in record territory; even setting a record for number of consecutive record closes at twelve. Sterling weakness since ‘Brexit’ has been a huge tailwind for the market; it also doesn’t hurt that the tides of general risk appetite have lifted all boats, too, as major global stock markets have done well during the same period. That hasn’t been the case recently, though, given the FTSE’s continuous rise while other markets – Nikkei 225, DAX SP 500 – soften up.
We suspect that while it’s been less than two days, it’s the UK index’s turn to soften up here. Yesterday marked the first down day in nearly three weeks, but more importantly the turn lower came at an important long-term top-side trend-line spanning from the top in 2013 over the 2015 highs. The decline also comes from just above the Oct ‘15/ Oct ’16 top-side trend-line we’ve been discussing for the past week or so. Given the two lines are about 35 points in proximity, we’ll call it confluence of top-side resistance.
One of the signposts we have been looking for to identify a break in momentum – a daily close below the prior day low. More specifically, a close below the last bullish day; which in this case, would be a close below the low on 1/13 of 7292.
Even without that close below the 1/13 low today, we expect the market to weaken here a bit. There isn’t an expectation that the FTSE will necessarily fall apart, but a pullback/consolidation phase is overdue at the least. We look for choppy two-way trade to develop, and for the nimble short-term trader this should present opportunities from both sides of the tape.
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.
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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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