Analys från DailyFX
S&P 500 & Nasdaq 100 Finding Support in Face of DB Fears
What’s inside:
- SP 500 and Nasdaq 100 turn lower off top-side parallel to find support at lower parallel
- Deutsche Bank concerns have Europe on edge and hit US futures, but have rebounded
- Continue to view lower parallel as important support given number of inflection points.
On Thursday, we took a look at several angles of support and resistance in the SP 500 and Nasdaq 100 as points of reference for short-term trades. Yesterday, the SP and Nasdaq both backed off hard from top-side resistance and found buyers at the lower lines of support.
Overnight we saw more heavy selling in Europe and bank stocks on continued concerns over the situation surrounding Deutsche Bank. The DAX gapped sharply lower, but is trying to muster a rally off key support (see earlier commentary regarding this). Keep an eye on the DAX, if it can rebound from here on negative news it would be a general positive for risk sentiment.
DB Jitters spilled over into the US, but since seeing the DAX stabilize US index futures are paring minor initial damage. Overall, the market is not telling us the Deutsche situation is a major cause for concern at this time given the muted response.
Where is the rebound coming from today? Once again, from the lower parallels the market held yesterday. The test and hold of those lower lines of support are further reinforcing their importance.
SP 500: Hourly
For the market to sustain higher trade these lines of support will need to continue to hold, a break, given the number of inflection points, would likely spur a sizable amount of selling. The Nasdaq 100, in particular, be bearish given it would trigger a neckline break of a head-and-shoulders pattern.
Nasdaq 100: Hourly
On this end, the fact the market is shrugging off bad news is viewed as a positive, so as long as support holds a rally could be sparked on a return in confidence. But, again, support breaks, so does our view and we will adjust accordingly.
Dialing out to the daily chart, a hold in the SP here and trade back higher would continue to fill out a wedge pattern, something we will visit later should it come to fruition.
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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.
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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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