Analys från DailyFX
Nikkei 225 Technical Analysis: Bullish Hopes Battered But Alive
Talking Points:
- The Nikkei has risen nicely since September, but seems to have hit an impasse
- The 19600 level seems beyond it; the bulls have failed there four times
- However, there may yet be reason for hope
Like many of its global peers, Japan’s Nikkei 225 equity benchmark has been rising quite consistently since September 2016. However, it appears to have hit something of a barrier.
For the last four weeks, the index has failed repeatedly to get above the 19600 level for any length of time, despite repeated assaults on that summit. For times the bulls have tried, and four times they have failed.
Is this barrier becoming significant, or will it too fall in time?
Well, a look at the moving averages for the index might well suggest the latter. The shorter-term, 100-day average has been above the 200-day since they crossed over back in mid-December. That sort of cross is held to be a bullish signal, and so it proved. The Nikkei is not around 19,300. Back then it was at 18416 or so.
As you can see from the chart below the two moving averages continue to diverge, which suggests that the index could still have more upside to give. It has already given plenty since that bullish crossover but the two have diverged more sharply since, which might give the bulls reason to hope.
The Nikkei may need to overcome resistance at the 19584 level to convince investors that it has what it takes for another leg higher. Above that, the next level to conjure with will be resistance at 20,012. The Nikkei hasn’t been that high since last November.
That sort of level would also offer investors the considerable psychological support of seeing the index back above 20,000. However recent history suggests that it doesn’t stay up there for long.
Still sending bullish signals. Nikkei moving averages.
Chart compiled using TradingView
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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
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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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