Analys från DailyFX
FTSE 100 Technical Analysis: Rolls Over from Year-ago Levels
What’s inside:
- The FTSE 100 failed to make a move above Aug ’15 levels
- Momentum in favor of the shorts at the moment
- BoE on Thursday
The last time we visited the FTSE 100 was on Wednesday of last week, and we highlighted the ascending wedge visible on the intra-day time-frames. Which direction it would break, in being consistent with our methodology, we suggested to wait and react rather than predict. As it turns out, the formation was a ‘dud’ and provided little solid directional indication, which was not to be fully unexpected given the break was to the upside, and to the upside was plenty of resistance. After poking above the August 2015 peak, the FTSE reversed and put in a small ‘pin bar’ reversal day.
The ascending wedge didn’t provide a good directional trade, but it did reach its apex before volatility picked up, which sometimes is all these converging patterns are good for – an indication volatility is about to rise. The past two sessions have seen the market cover most of the area the FTSE traveled from July 12 up until its highest point last week.
Momentum is in favor of short psoitions at the immediate moment. Support comes in around 6610, below there we have to dig about 100 points or more for the next level of significant support. Resistance now stands strong around 6745/80.
The market could continue to range from here, hard to say. The FTSE has a tendency to make large moves, then go through extended periods of ’nothing-ness’.
We do have a high impact event, though, coming up on Thursday which could provide a boost to volatility and clarity on market direction. The BoE meets to make a decision on rates, its asset purchase target, and publish its inflation report. Expectations are for the central bank to reduce its rates to a record-low 0.25% from 0.5%. It remains to be seen how the market will react, and could largely have to do with any language expressed by the BoE. Large chunks of the rebound in the FTSE 100 following the referendum was in anticipation of the BoE easing; this skews risk to the down-side should market participants feel disappointed.
Track trader sentiment in real-time with FXCM’s ’Speculative Sentiment Index’.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
He can be reached via email at probinson@fxcm.com with any questions or comments.
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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