Analys från DailyFX
S&P 500 Technical Outlook: Correction Over?
What’s inside:
- SP 500 surges with global markets following round one of French elections
- Breaks multi-week trend-line, recaptures November trend-line
- Still looking for one more level to be overtaken before calling the correction over
Can the rally in global equity markets continue through Q2? See our forecast for details on what’s driving stock markets!
On Friday, this is what we had to say regarding the current technical structure in the SP 500: “The case for lower prices is still intact, but barely. The market needs to turn lower pronto or else we will be looking to change gears towards a market rally.”
Yesterday, global equity markets surged thanks to the outcome of the first round of the French elections. No market was left behind. The 1%+ rally in the SP put it above the trend-line running down off the March 1 record high and the index also managed to recapture the November trend-line. To further increase the likelihood we’ve seen the worst of the multi-week correction we would like to see the swift 4/5 reversal-day high at 2378 taken out, first. From there it shouldn’t take long for the market to reach new record highs.
The Nasdaq 100 is already there, which is a good sign for the rest of the market. The SP 500 and Dow look to not be far behind in notching out fresh highs.
Before running off the to the races it’s possible we first see a decline from here and fill Monday’s gap, but we’re not banking on that at the moment as a high probability scenario. True, gaps often get filled, but not always in a very timely fashion. General risk appetite looks strong enough to keep the market from falling back that far.
To conclude and reiterate; until we see the 4/5 high overcome we aren’t ready to call the correction over. We are placing importance on that day simply because of how violently the market reversed (it was the day the March FOMC minutes were released). Beyond that day high only 2390 stands in the way of the record high at 2401.
SP 500: Daily
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—Written by Paul Robinson, Market Analyst
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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.
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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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