Analys från DailyFX

S&P 500: New Highs Hard to Buy, But No Need to Be a Hero, Either

Published

9 år ago

22 november, 2016

DailyFX

What’s inside:

The SP 500 moves to new record highs, joins other indices
Propensity for the market to eventually fail new highs, but no need to be a hero here
Holiday week of trading, with Thanksgiving on Thursday

The SP 500 is playing catch-up with the Dow and Russell 2000, as it finally achieved new record highs yesterday. The Russell 2k (small-caps) has been positive for 12 consecutive sessions, a nearly unprecedented streak, and one expected to end soon. But generally speaking, U.S. stocks are likely to continue to hold a bid for the foreseeable future.

It’s a holiday week in the U.S., with markets closed on Thursday for Thanksgiving. On Wednesday, many market participants will look to leave their desks early and Friday is set up for a ‘nothing-type’ day in terms of volatility and volume. The combination of persistent upward pressure, new highs, and a holiday trading environment make fighting the trend a difficult proposition. No need here to be a hero.

Until we see sharp downward price action telling us there has been a material shift in sentiment, the likely path is to be choppy with an overall upward bias. The trading environment is not likely to be an easy one, but with the right approach by the nimble short-term trader (intra-day to 1-3 days), taking trades off levels with close-at-hand target objectives can still yield positive results. From a swing-trader’s standpoint (days to weeks), it’s difficult to buy into these types of up-moves without first seeing a retracement or a consolidation at the least. Shorting with expectations of a big drop, while always possible, is not the most probable scenario at this time.

We will first look to support in the 2188/2194 area (2194 = old highs), and below there, should we see the first levels fail to hold, the market is likely to find dip buyers in the 2170/82 vicinity. Looking to potential ‘hidden’ resistance at new highs, there lies a trend-line running over peaks during H1, 2015 and the August highs. Right around the 2207 mark at this time.

SP 500: Daily

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Worth noting now that we are at new record highs, is the propensity for the market to punish those who chase the market higher with new longer-term holdings. Since 2013, when the SP 500 broke above the 2007 peak, nearly every rally to new highs following a meaningful pullback eventually failed within days to a couple of months. It’s a broad range, but the bottom line is; buying record highs might work for a while, but those positions held for an extended period of time eventually sunk back into the red. Entering on dips trumps chasing. Knowing this tendency might get some shorts excited, but it can be an arduous haul before getting the desired result. We will expand more on this at a later time should we see price action suggesting a top may be in.

Daily: 2013-Present

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—Written by Paul Robinson, Market Analyst

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Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

8 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

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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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

8 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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

8 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