Analys från DailyFX
FTSE 100 Tech Update: Buyers Found, Resistance Ahead; EU Vote Adds a Wrinkle
What’s inside:
- FTSE finds late-day buyers, futures furthered along with help of U.S. stocks reversing
- Big picture HS pattern still in play, working on retest of neckline
- Circumstances are unusual with the vote coming up, trading plan needs to be adjusted accordingly
Yesterday, in the last hour of the cash session the FTSE found buyers and the futures were then boosted further with some help from across the pond.
Even with risk sentiment improving in the last 24 hours, the FTSE remains within the construct of a bearish trend following an important break of the ‘head-and-shoulders’ neckline. The HS formation indicates a much larger drop ahead.
Today’s modest follow through on yesterday’s reversal is pushing the UK index towards a full retest of the neckline break, not an uncommon occurrence. The FTSE day high so far is ~6030, so it’s very close to pressing up against our noted zone of resistance in the ~6050/80 vicinity. It’s close enough to call a retest, in our book. A rejection from here or a little higher is our cue that we’re headed lower.
FTSE 100 Daily
Which brings us to a very important topic: Under ’normal’ circumstances there would be little hesitation on this end to look for an opportunity to short off this key area should price action warrant such a maneuver. However, we aren’t trading in times of “normalcy”, are we? No. The upcoming ‘Brexit’ vote throws a wrinkle in taking a position in anything directly UK-related, namely the FTSE and sterling. Especially heading into the weekend.
With that said, trading time-frames should be dialed down along with leverage, and extra caution is warranted. Going into the vote itself, flattening out positions is a recommended strategy. Once we see what the outcome is and how the market reacts to it, we can then assess what the most appropriate course of action will be.
Find out what characteristics successful traders possess in our free guide, “Traits of Successful Traders”.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX, and/or email him directly at probinson@fxcm.com.
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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