Analys från DailyFX
S&P 500 Tech Update: Looking to Short-term Chart for Direction
What’s inside:
- The SP 500 is working off oversold conditions
- The Nasdaq leading the way or market divergence sign of more weakness to come?
- Short-term chart and levels in focus
On Friday, we discussed the SP 500 bounce from deeply short-term oversold, but we asked whether it was for real. Has the market found a tradable low and ready to push to new heights or is it working off oversold conditions before taking another stab lower?
The Nasdaq 100 recovered very quickly back to near record highs after falling for what amounted to a one-day bear market, which shows us there are plenty of dip buyers out there. Apple (AAPL) shares flexed their muscles during the bounce (trading from 102s to 115s in days), which with the Nasdaq being dominated at the top by a few names helps explain why the tech-heavy index has been so much stronger than other major US indices.
The SP and Dow continue to lag behind and aren’t nearly as buoyant. The takeaway from this is unclear. The Nasdaq could be leading the way and soon the others will follow suit, or we could simply be witnessing a divergent market that could lead to further weakness.
We have our attention focused on the SP intra-day charts in our search for clarity, and given the lack thereof on the daily, our trading continues to be centered around ‘hit-and-run’ opportunities.
In early trade today the SP is finding some resistance around the 9/15 pivot at ~2151. A break above 2151 will lead to the market quickly into resistance in the 2155/63 zone. As long as the market stays below 2163, then a lower high could develop more broadly from the highs in the early month, keeping the chart pointed more bear than bull.
Support arrives at a small trend-line/lower parallel running back to 9/14 (this may keep the very near-term pointed higher, making it pivotal for now), then below there the Friday low of 2130, the trend-line off the recent swing low to start last week, 2114, then 2108.
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinonFX.
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Emails can be directed to probinson@fxcm.com with 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
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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