Analys från DailyFX
FTSE 100 Seeking Resolution from Range, Be Careful of False Breaks
What’s inside:
- FTSE 100 range continues (good for range-traders, bad for trend traders)
- A break in either direction will bring the index to significant levels, false-break alert
- Tactical considerations outlined with levels
Find out what’s driving the FTSE 100 and British Pound in our Q3 Forecasts.
For nearly two weeks the FTSE 100 has been trading back-and-forth in a range. If fading price swings is your forte, then the UK index has been the place to be. For those trying to latch onto a trend, it’s been a tough trading environment. When will the range break? Likely soon, but in both directions there could quickly be opposition upon a breakout which lead any breakout we see to be short-lived, and as a result – false.
On the top-side, a clean break above the 7388 threshold will quickly bring the underside of the June ‘16/’Brexit’ trend-line and 2013 trend-line into play; both are lining up in the vicinity of 7410/7425. Also, given it would be against the trend off the June high it might be a difficult move to sustain.
Looking lower, clean break of 7302 is needed to get the market moving lower, but with the February 2016 trend-line running not far beneath momentum may quickly be muted on a range-break.
From a tactical standpoint, this makes positioning tricky. One of the ‘safer’ ways to enter on a range breakout is to wait for a confirmed breakout (closing bar outside of the range), and then re-enter on a retest of the broken level. For those taking range-fades, we’re now sitting at the upper-end where a steadfast level of resistance remains.
The general trend since June coupled with the fact other European indices look heavy suggests an upside breakout may be false, and that should we see a downside break the 2016 trend-line might not provide the support needed to keep the footsie from falling. But until we get a cleaner set-up, we’ll reserve ourselves until we see a resolution.
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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