Analys från DailyFX
S&P 500
What’s inside:
- Market pulling back to start week as anticipated
- Sequence of higher highs, higher lows in jeopardy
- Swing trade from short-side developing
Market pulling back from resistance as anticipated
Yesterday, prior to the cash open the SP 500 came within a couple of handles of the bottom-side of our targeted resistance zone near 2080, and nicked the top-side trend-line on the hourly chart. We went into the day thinking a pullback could develop to start the week. Thus far we are seeing that theme continue to unfold further into today.
Uptrend in jeopardy of breaking down
The SP is currently trading beneath the trend-lines extending back to the March 10 and February 11 swing lows. This doesn’t mean the uptrend is over just yet, but it does open up the possibility and expose Friday’s low at 2043.50, which if broken would market an important break in the sequence of higher highs and higher lows in place since the 2/11 bottom. A lower parallel lies around the Friday low, but at this time we are labeling it a ’2nd degree’ type of support level.
The depth and overlap of the past two retracements in such close proximity to one another shows a market losing momentum. Sellers becoming more aggressive, buyers backing away.
SP 500 Hourly[Daily]
Short-trade developing
The trend is higher, but is quickly coming under fire, at least in the short-run. In recent, trades from both sides of the tape have been kept to very short durations on this end, but at some point in the not-too-distant future a swing trade from the short-side looks likely to materialize. If a lower high develops following a break of the Friday low, or even a lower high from current levels, our conviction level for establishing a short-trade with a hold time longer than a day will increase significantly.
We aren’t looking for the market to fall apart, but a healthy pullback before attempting to move higher looks very likely to take shape relatively soon. Later when it becomes more relevant we will discuss why the next move lower appears more likely to be of the pullback variety versus the beginning of another major turning point for the bears to grab hold of.
Whether you are a just getting started in trading or have been in the game for a while, we have guides which can help you become a better trader.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter @PaulRobinsonFX, or email him directly at probinson@fxcm.com.
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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