Analys från DailyFX

S&P 500 Approaching Record Highs Lends to a Couple of Possibilities

Published

7 år ago

14 juli, 2017

DailyFX

What’s inside:

SP 500 negates previous topping scenario, record highs very near
The question is, will we see a breakout, double-top, or more range price action?
Outlined are signposts to determine which it might be, and tactical suggestions

Could the stock market be nearing a major high? See our Quarterly Forecast for our outlook.

The other day we were discussing potentially bearish price sequences in both the SP 500 and Nasdaq 100, but both needed to stay below key levels in order to keep that bias intact. Such was not the case as we saw global markets pop the past couple of sessions. The rally doesn’t quite get the bulls off the hook just yet, as range-bound conditions or even a possible double-top could develop in the SP.

There is no denying the longer-term trend is firmly higher, and finding ‘the’ top is not an exercise we are interested in partaking in. But even with that said, we could soon see another turn lower that offers shorter-term-minded traders an opportunity to take advantage of price weakness. The SP is on approach to record highs at 2454. If we see a rejection around that level it could signal a move back towards 2405, continuing a range-trading environment, with an opportunity for shorts. If a move lower develops towards 2405 we would then become cautious on bearish bets and watch how the market responds to this important support level (it could also be in confluence with the December slope). There might be a long-trade in there as the range remains and buyers continue to keep the market propped up.

If, however, we were to see the 2405 level break, then it could be game-on for the bears, as we receive confirmation of the double-top. But not to get ahead of ourselves, we’ll first focus on the resistance level quickly approaching and go from there. If the SP can gain traction through the record high on a daily closing basis, then the continued range scenario would be undermined. However, it wouldn’t necessarily be a sign that it is time to ‘get all bulled up’, as buying breakouts in equities has long had a history of burning those who paid up for new highs. Furthermore, there is a top-side trend-line extending from the March 1 high over the June high, as well as the under-side of a slope rising up from the November low. This could put a lid on the market, even if for just a short while. A clean breakout, though, could present a pullback trade to enter long if the market were to then hold the prior record high as support.

The bottom line is that volatility is low, as evidenced by a 10-handle on the CBOE Volatility Index (VIX), which can make for difficult trading. Expectations need to be tempered. But there are scenarios which could lend themselves to taking advantage of the price action we are seeing.

On Tuesday, in the weekly “Indices Commodities Analysis for the Active Trader” webinar we’ll discuss new developments in detail.

SP 500: Daily

Paul conducts webinars every week Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of all upcoming live events.

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email by signing up here.

You can follow Paul on Twitter at @PaulRobinonFX.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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