Analys från DailyFX
S&P 500: The Range Won’t Last Forever, It Just Feels Like It
What’s inside:
- FOMC does nothing to break the SP 500 free from its range
- Support and resistance boundaries remain the same, waiting for a break
- Traders need to stay alert despite ’boring’ market conditions
The title of yesterday’s commentary: “SP 500: Looking to the FOMC to Spring It Free”. Well, we’re still waiting…It was a rather uneventful reaction to the outcome of the Fed, with only a range of approximately 15 handles and a closing price about 2 handles higher than where the SP was prior to the release of the decision and policy statement.
Traders are struggling to find opportunity in the sideways chop we call the stock market. The Nasdaq 100 has moved up a bit since the SP started the horizontal waltz and the Dow has moved down just a shade. Patience is required…
We have discussed reasons why the market looks more likely than not to break to the down-side (complacency, breadth market tendency), but until price action breaks out in either direction none of the indicators or studies we look at matter at this time.
Support continues to remain in the 2155/60 area, while resistance in the 2174/78 zone. A sustained break of either side will be required to grab our attention. Traders looking to play the range can continue to do so as long as these boundaries hold, but the situation is growing long in the tooth and a break is growing closer.
What will break the market from its range? Anyone’s guess. Tonight at midnight GMT time we have the BoJ in store; the general consensus is the central bank will make a move, but to what extent is the big question mark. Depending on this outcome, markets could be making moves heading into tomorrow. Perhaps this will be a kick start for a directional move out the SP, perhaps not. In any event, we should be on our toes as this range won’t last forever even if it feels like it will.
Find out what qualities profitable traders possess in our guide, “Traits of Successful Traders.”
—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
You can email him at probinson@fxcm.com with any 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
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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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