Analys från DailyFX
FTSE 100 Trading Around Big Support, Eyes on BoE
What’s inside:
- FTSE testing very important support
- Clean break of 7100 should see increased selling pressure, strong push higher needed to turn momentum upward
- BoE today could prove to be impactful
On Friday, we were making note of the weak bounce the FTSE 100 was putting in just ahead of old record highs. This is what we had to say last week:
“We’re still sitting close to a big level of support, so any drop from here could find it challenging to gain momentum, but if the FTSE takes out 7100, a clear breach of the old highs, watch for increased selling pressure.”
The whole figure was taken out by a few points to start this morning, but we’re seeing some buying keep the footsie propped up above for now. It’s been flirting with a break all week; 7104 is the old record closing high from 2015, while 7130 was the intra-day record from October we’ve been watching. All-in-all, a strong break of 7100 is what we are looking for if more downside is to come.
Immediate levels on the down-side to watch, should the market break, are at 7067 and then the more important area of support comes around the trend-line(s) off the June lows (clocks in near 7000). The 11/10 spike high of 6997 could coincide.
The decline over the past couple of weeks could come to a halt around current levels, always a possibility as the market gears up for another push higher; we’ll want to see a strong rally off support first, though, before moving ahead with that possibility.
FTSE 100: Daily
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At mid-day (12 GMT) we have the Bank of England policy meeting on the docket. We’re not going to step out on a limb and make any predictions, sticking to the usual discipline of taking a reactionary stance. It’s ‘Super Thursday’ (quarterly inflation report as a bonus), and with that said there is room for increased volatility for ‘all-things-UK’ – keep an eye on GBP, 1-month correlation is at a strongly negative 91% to the FTSE 100.
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—Written by Paul Robinson, Market Analyst
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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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