Analys från DailyFX
S&P 500 Tech Update: Treading Near Record Highs
What’s inside:
- Market remains quiet, shaking off the summer rust continues
- Benefit of the doubt is with the long-side until signs tell us otherwise, but…
- One bearish alternative in the SP 500 could change that with time
On Tuesday, we said the end of the summer is unofficially over as the Labor Day holiday passed to start the week. Experience tells us it typically takes a week or so after for the market to shake off the rust, especially given there are no major catalysts and the market sits perched merrily near record highs. This isn’t making our lives easy as traders, but a pickup in activity is around the corner, so don’t fret.
Moving on to the chart…
Monday we looked at the bull-flag forming within a differing set of angled lines which engulf all the painful grinding price action going back to mid-July. The market inched out of that bull-flag pattern on Tuesday and sits outside of it this morning. A burst through the top-side parallel would have been more ideal, but nevertheless it is difficult to view the market through a bearish lens at this very moment until we see price action suggesting we should do so.
One bearish possibility to keep in the back of your mind, though, should the market stall right here, is a head-and-shoulders pattern. But, again, the SP will need to turn lower starting very, very soon and not move above the August high at 2194. A lower high could then become the right shoulder of the formation, with confirmation coming on a break of the neckline, which roughly coincides with the lower parallel of the channel in place back to mid-July.
Again, though, given the HS formation needs some more time to develop and then break the neck-line, there isn’t anything readily suggesting the market will rollover at this time.
For now, we will continue to give the benefit of the doubt to the long-side given the overall bullish trend and current technical structure. A daily close above 2194 should help see the market to the upper parallel (2205/2210) crossing across July/August peaks. A rollover from here towards the lower parallel would increase the odds for the bearish HS formation scenario.
We will continue to tread waters carefully until volume returns to the market in full force.
Sharpen your skills in technical analysis today and check out one of our free trading guides designed to help traders of all experience levels.
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at 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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