Analys från DailyFX
FTSE 100 – Watch This Trend-line, It’s Been a Problem Since January
What’s inside:
- FTSE 100 is trading at important long-term top-side trend-line
- It will be treated as resistance until broken
- Levels and tactical considerations
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Yesterday, as anticipated earlier in the week, the outcome of the BoE meeting had little impact on the FTSE 100, and the limited volatility we saw in markets was concentrated in sterling. An often occurrence – FX and rates react to key fundamental events, stocks not so much.
There was a solid thicket of resistance in the vicinity of 7255/300 (bottoms from March April), but on Tuesday the footsie was able to fully clear above, and with that the focus shifted towards the trend-line off the March high, and more importantly the long-term 2013 to current trend-line. It’s been a problem for the market on four occasions since January, with only one instance back in March where the market was able to push on through for a whole three days.
We’re at the top-side trend-line now.
Given its influence, we look for the market to struggle. How it struggles will be the tell moving forward: a small dip and consolidation just beneath, or will a swift rejection develop? We’ll soon find out. Tactically speaking – first off – we don’t buy resistance, so the FTSE will need to clear above and also take out the record high at 7447 before becoming constructive from here. Even then, buying breakouts is not the preferred approach; instead we would like to see a breakout, then look to old resistance to act as new support on a dip. For would-be shorts, a rejection from the 2013 t-line may present an attractive way to play short-term weakness. The past four times the market turned lower from this line of resistance it did so in very short-order (a couple of days, tops). So, if it is going to turn it should be no later than early next week. If it doesn’t turn, the longer the FTSE hangs out around resistance the more likely it is to eventually break it and make a run for new record highs.
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.
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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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