Analys från DailyFX
Nikkei 225 Technical Analysis: Hemmed In, But At the Heights
Talking Points:
- The Japanese benchmark has stalled, but it has done so at a pretty high level
- If many investors want to cash out, it’s not obvious
- The moving averages tell a bullish tale too
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The Nikkei 225’s daily technical charts aren’t giving much away, it must be admitted.
For sure the Japanese equity benchmark snapped quite a steep an uptrend channel from September 8’s lows with two modestly lower closes on the 21st and 22nd of the same month. But even so it remains very close to its high for 2017- September 21st’s intraday top of 20,498. That’s also the highest level reached since August, 2015.
Moreover, it’s clear that there is plentiful appetite to hold the index even at current very elevated levels, with no obvious sign of widespread profit-taking. This could be taken as quite encouraging from the bulls’ perspective, especially given the rarity of forays to this altitude in the past two years.
Momentum indicators aren’t offering any obvious clues with neither the Relative Stength or Money Flow Indexes suggesting significant overbuying at this point. However, a look at the simple movng averages offers more encouragement. The shorter-term, 20-day average crossed above the 50-day on September 20 and went on to cross above the 100-day on the Tuesday this week. This sort of action is known as a bullish crossover and now we’ve seen two in short order.
Added to the lack of selling impetus at the highs, the moving averages strongly suggest that what we’re seeing here is a consolidative pause before another push higher. For evidence, keep an eye on this new uptrend channel which contains all the action since that September 8 low. It’s not yet incredibly persuasive but if it holds into this week’s close then that prognosis will be a little surer.
If the index manages to push on further into new-high territory for the year it will be worth watching the money flow numbers more closely too for evidence of investor conviction.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
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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