Analys från DailyFX
S&P 500: Converging Trend-lines Offer Traders Short-term Reference
What’s inside:
- The SP 500 turns lower from trend-line resistance, again
- NFP Friday could trigger volatility
- Upper and lower trend-lines present spots from which the market could reverse
In Thursday’s commentary, we said we were turning to today’s jobs report as a possible source of volatility for the SP 500. But before we even got to today we saw a little volatility yesterday after the SP 500 (FXCM: SPX500) found resistance at the noted trend-line off the 8/23 peak. It was the 4th touch and 3rd true lower high since beginning the choppy trend lower.
The 20+ handle drop made a lower low from the prior two bottoms made in late August trade, but was reversed sharply. This led to yet another session of modest net change by day’s end.
Heading into today’s jobs data we are still operating within the constructs of a downward trend, albeit with little momentum. Another rise, touch, and reverse off the two-week trend-line presents another opportunity for ‘would-be’ shorts.
A decline to yesterday’s low and just a tad lower will bring in an underside trend-line running back to a low created on 8/17. For now, we will operate off of that as an area of support.
When it comes to big data releases like today’s, often times, barring a massive deviation from expectations, the market will overact initially following the release and then fade before settling. On that, keeping those upper and lower bounds in mind could present spots from which to take ‘fade-trades’.
No predictions on this end as to what the outcome will be, taking the usual reactionary stance. Given the past two NFP releases have been sizable beats, one has to wonder, though, if we will see a third big surprise in a row, in either direction. The market is looking for an August NFP figure of +180k, the unemployment rate to tick lower to 4.8% from 4.9%, and a small move down in average hourly earnings to 2.5% YoY from 2.6% YoY prior.
Track trader sentiment in real-time via the ‘Speculative Sentiment Index’. If you are looking for some weekend reading material, check out our free trading guide, “Traits of Successful Traders”.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at probinson@fxcm.com with any questions or comments.
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
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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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