Analys från DailyFX
Nikkei 225 Technical Analysis: Trend Line Guides Prices Lower
Talking Points:
- The Nikkei has been rejected at trend line resistance once again
- For the moment, this looks like a short-term problem
- But longer term bullish indicators could be threatened if the bulls can’t fix it
The Nikkei 225 seems to be in a spot of technical trouble, at least when looked at from a short-term perspective.
This might not be obvious. After all, the index has been meandering for a couple of weeks, notching up almost as many rising days as fallers. Nevertheless, it has remained capped by a downward-sloping trend line in place since mid-March.
Clear weakening. Nikkei 225 short-term
That’s not good news for the bulls. At the time of writing (02:35 GMT on Tuesday, April 4) this barrier doesn’t look at all threatened. It comes in at 19150 or so, meaning that the Nikkei is 250 points below it. Given current daily trading ranges a quick retake of that point looks like a big ask.
This puts short-term focus on the downside, where clear support remans hard to sport until we get all the way back to 18823, which arrested the index’s early-February slide.
Longer-term however, the picture looks a little brighter. The Nikkei remains very well within an ascending channel which began back in July 2016. The base of that channel is miles away to the downside at around 17500. So, nothing serious to worry about, right?
Holding up. Nikkei 225 longer term
Well, clearly the benchmark’s short-term problems look a lot less serious when viewed from this perspective, but there is a caveat.
The top of that ascending channel hasn’t been threatened since the Nikkei’s long climb topped out back in January. And that top is getting ever further away by the day.
If the index is to stage a convincing return to the form it showed earlier this year, that channel top needs to get a little closer. If it doesn’t, then short-term weakness could start to look a little more like a long-term problem.
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— 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.
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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