Analys från DailyFX
S&P 500 Tech Outlook: Pointed Higher, Nasdaq 100/Dow Levels in Play
What’s inside:
- SP 500 poised for 2300/20
- Strong push back into consolidation would bring in possibility of a failed attempt to breakout
- Nasdaq 100/Dow Jones techs, targets
To start the week, we took a close-up look at a triangle forming on the ‘right shoulder’ of a continuation-style inverse ‘head-and-shoulders’ pattern; the wedge officially triggered yesterday kicking off what should now lead to an extended move higher out of the six-week-long base.
We’ve maintained a neutral bias for as long as the market remained in a congestion phase, and had this to say on Monday:
“As long as the market stays confined within its recent range, trading will remain tough. Our approach at this time is to wait for the market to loosen up first, then react accordingly. With the range narrowing (triangle) we should soon see a move towards price expansion.”
Indeed, it appears this may be the case now.
The SP is poised to rally towards the psychological level of 2300 and measured move target of the inverse HS continuation pattern at ~2320. Minor resistance lies at the under-side of a pair of trend-lines around 2290/95; one off the Feb low and the other from November. The risk of of a false breakout exists with the market so close to breakout levels. Should the market fall swiftly back inside the basing formation, then we will need to consider this possibility. We’ll touch on that later should that situation develop.
SP 500: Daily
Created with Tradingview
The Nasdaq 100 has been leading the way higher, and after finally arching over the top-side trend-line extending back to August, it has its eyes set on the upper parallel belonging to the trend-line running up from the Feb lows; it’s in the vicinity of 5170/80. The cleared August t-line will be used as near-term support.
Nasdaq 100: Daily
Created with Tradingview
The Dow Jones needs to clear the 20k mark to break out of its consolidation pattern, but should do so quickly given the posturing of the other indices. The depth of the consolidation points to a measured move of about 300 points, or 20300.
DJIA: Daily
Created with Tradingview
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—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.
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
- Very relaxed at USD 75/b. Risk barometer will likely fluctuate to higher levels with Brent into the 80ies or higher coming 2-3 weeks
- Brent needs to fall to USD 58/b to make cheating unprofitable for Kazakhstan
- All eyes on OPEC V8 and their July quota decision on Saturday
- Brent steady at $65 ahead of OPEC+ and Iran outcomes
- A shift to surplus will likely drive Brent towards the 60-line and the high 50ies
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