Analys från DailyFX
Nikkei 225 Technical Analysis: Rescued in the Nick of Time
Talking Points:
- The Nikkei has returned from its holiday break in fine spirits
- However, its last visit to these highs was brief
- Can investors hope for better this time
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A rest clearly did the Nikkei a power of good.
After three days of closure for the Japanese Golden Week break, the Tokyo benchmark returned to full trade on Monday to find that global indexes had not only kept their vigor but built on it in the interim. Confirmation of Emmanuel Macron’s always-likely victory in France’s presidential vote only added to the upward impetus.
Sure enough, the Nikkei has risen to highs not seen since December 2015. Can it stay up here? Well, if we look at the last time it visited these highs, the omens are not good.
The last try didn’t last.
Back at the end of 2015 the Nikkei only managed to stay around current levels for about twelve days before altitude sickness set in with a vengeance.
History need not repeat itself of course. Current gains are impressive and backed up with rising volume, which is a bullish sign. Moreover, investors may feel justified in hoping for more this time around because the index has climbed from a much more solid base. The year’s trading range is not so far below current levels as it was in 2015, and has endured for longer than it did then.
So, investors may feel entitled to hope that, even if the current highs are rejected, consolidation will just see the index back in familiar 2017 territory between 18673 and 19738. And they may be right, but it’s important to consider that the current rise started from a rather uncomfortable point, as the chart below shows:
That range had broken quite clearly to the downside before the Nikkei was rescued by the current revival. If it cannot consolidate and build convincingly on recent gains, then it may have to fight quite hard to stay out of the downward channel which preceded this rise.
— 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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