Analys från DailyFX

If the Euro Weakens Will the DAX Find Life?

Published

7 år ago

8 augusti, 2017

DailyFX

What’s inside:

DAX still in grips of bearish topping pattern, but…
IF the euro can weaken it could negate the pattern
Technical levels and considerations outlined

Find out in our Q3 Forecast what’s driving the DAX and Euro.

The inverse correlation between the DAX and the euro isn’t a secret (21-day is at -90%), but for those who may have let it slip to the back of their minds they were reminded on Friday with the release of the U.S. jobs report. While by the end of the day the euro had a relatively large decline, it was the initial reaction to the upbeat jobs report which showed how jumpy traders are. EURUSD declined about 40 pips in the minutes following and the DAX spiked 60 points and never looked back. The DAX on an intra-day basis was even leading early-on. A telling story about what a big move out of the euro could potentially do to the DAX. The euro is set up for weakness as we discussed here and here, so on that we’ll want to pay attention to how German stocks react should a bearish euro thesis come to fruition. Keep in mind, though, correlation only accounts for the directional relationship; the magnitude at which the two markets move is unaccounted for. For example, the euro could decline aggressively and the DAX only rises modestly. Also remember, correlations can fade without warning. But overall, it’s one worth paying attention to.

Moving on the to the technical picture of the DAX…

Last week, we expressed our ongoing bearish bias for the DAX, with expectations for it to continue lower after breaking the neckline of the bearish ‘head-and-shoulders’ pattern. This could still be the case as it still has resistance to clear and a downward trend structure in place since June it must break. The HS formation is still valid despite the market trading back above the neckline. It won’t become invalidated until we see a push above the June trend-line and right shoulder over 12600. A move above the trend-line will likely be enough for us to abandon the pattern, though.

Yesterday, we saw the area around 12300 turn out to be problematic as suggested would be the case in our outlook heading into the week. Up to around 12340 will be important for the near-term bias. Stay below, neutral to bearish. While a break above could bring in some top-side momentum with the June trend-line quickly coming into focus. Support comes in at the bottom of the recent congestion period just under 12100, not far above the French election gap-fill at 12048. Support below there is followed up by 11941, 200-day at 11892, then 11850.

DAX: Daily

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—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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