Analys från DailyFX
S&P 500: Short-term Trading Levels & Considerations
What’s inside:
- SP 500 daily consolidation developing into a triangle on the hourly
- Still needs to mature, but an increasingly plausible scenario
- FOMC may be the fly-in-the-ointment, though
For a longer-term view on the SP 500, or another market of interest, see our quarterly forecast.
Yesterday, we looked at the SP 500 and said it looks as though it is consolidating for another move higher, which was based on the sideways price action on the daily time-frame after last week’s early gains. Pulling in a little closer (hourly time-frame) the consolidation is beginning to take on the shape of a triangle. It’s not yet fully developed, but if it is to mature it is likely to do so within the next day or so. Another jab lower and test of the lower-side of the pattern and then a bounce would be enough to fill out the formation.
As it currently stands with the bottom and top-side trend-lines it will be of the symmetrical variety, and given the prevailing trend the likelihood is for it to break higher. Should we see this unfold the measured move target based on the pattern height is ~2408, or 7 points into new record territory. Momentum could carry it further at that point.
A break lower (can never rule out a break against the trend with a triangle) would point to a move towards 2367, which is roughly where the bottom of the 4/24 gap-day low comes in at 2369. Get into that gap and the market might be in for some trouble as it makes a serious attempt to fill down to 2349.
All-in-all, it’s a rough, but increasingly plausible scenario that we see a triangle develop. We still need to be patient in its development. It would appear likely a top-side break is in the cards, but we can never rule out a breakdown. That’s the nature of triangles – they signal pending expansion in price, but can break in either direction, and are known to make a false break one-way then reverse to go in the intended direction. If a false break were to happen, with the trend higher, it is more likely the false break would be lower before reversing higher.
The potential fly-in-the-ointment for this becoming a tradable opportunity is the FOMC rate decision, policy statement on Wednesday. While there is no expected change in rates, and maybe we only see fairly benign language out of the Fed, the gyrations which result after the meeting concludes could be enough to wreck the pattern if there hasn’t already been a breakout.
SP 500: Hourly
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—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.
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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- Bombs to ”ceasefire” in hours – Brent below $70
- A muted price reaction. Market looks relaxed, but it is still on edge waiting for what Iran will do
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