Analys från DailyFX
FTSE 100 Technical Outlook: Vulnerable Heading into Election Results
What’s inside:
- FTSE 100 turned down from resistance as anticipated
- Broke support yesterday, looking headed lower towards ~7400 or worse, but…
- Today’s election puts a hold on action, taking the usual reactionary stance over predicting
Looking for a longer-term view on the FTSE 100? Check out market forecasts.
On Monday, we were discussing the bearish implications of last week’s ‘twin reversal bars’ from the January to current top-side trend-line; the reversal events also resulted in a ‘perfect’ doji on the weekly chart. The only thing we viewed as keeping the market propped up was the April trend-line, which was undermined yesterday. The rejection at resistance and break of support has the FTSE set up for a move towards a big area of support around 7400; the 2013 top-side trend-line which gave the market fits from January to April and then support in May is viewed as rather significant. As we said on Monday, a break below there could bring into play a larger topping formation. We won’t delve into that until it becomes relevant.
So, the market is positioned for further losses, but…
There is this ‘election-thing’ going on today. Depending on the outcome the market may either want to rally or drop. How insightful. On this end, no speculation will be made as to what will happen, taking the usual reactionary stance to major events versus making a prediction. But, to that end it risk appears risk is skewed towards seeing a small rise on a Conservative victory and a large drop on a Labour victory/hung parliament. Right now, the market is positioned for the former not the latter, and if the market is correct, in the end this may all come and go with little drama.
A smallish pop in the market, given the currently bearish landscape, may end up being the best set-up for ‘would-be’ bears should it start to fade. Again, taking a reactionary stance over making any predictions. There will be plenty of time to take advantage of volatility once we know the outcome.
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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