Analys från DailyFX
S&P 500: Confluence Points to a Bounce, Even if for Just a Day
What’s inside:
- The SP 500 has been down numerous days…
- Trading into a confluence of support
- Short-term view with levels outlined
The SP 500 hasn’t had a positive day since last Monday, which isn’t to say the market should bounce just because it’s been down numerous consecutive days, but it certainly means, statistically, we are very likely close to at least one day up. With the election on Tuesday, and lots of uncertainty surrounding it, it is reasonable to conclude whatever bounce we get won’t be uber-powerful.
Where might a bounce come from, even if only for a day?
There are a few lines of influence intersecting in the vicinity of yesterday’s low at 2094 down to about 2085 – June, August, and October parallels (see chart). Below there the widely-watched 200-day lies at 2081. So, even though consecutive down days, in and of itself, doesn’t qualify as an oversold indicator, when we have a confluence of technical events close at hand it increases the odds we will see support act as a springboard. (A good shorter-term oversold/overbought indicator is the % of stocks in the SP 500 trading above the 10-day MA, which is currently at under 23%. It’s down there, but not until sub-10% will alarms begin going off.)
SP 500: Daily
Created with Tradingview
For the short-term operator, here is a look at the 60-minute chart. In the 2094/85 confluence zone down to the 200-day at 2081 at the worst, we will be on the lookout for a reversal in price action (i.e. – pin bar, bullish engulfing, etc.). Should we start to bounce, the first key area of resistance comes in at the underside of the 10/24 channel (~2110/12), then the more important daily swing low at 2115. With some vigor, the 10/28 pivot at 2119 will come into play. Beyond there, with a really aggressive rally (unlikely at this time) we would look to top of 10/24 channel and the important 2130/33 area.
If aggressive selling continues to carry the market lower, then we may have to continue to use broken support levels as resistance levels on weak bounces until we see some kind of flush that indicates the move is over.
60-minute
Created with Tradingview
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—Written by Paul Robinson, Market Analyst
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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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