Analys från DailyFX
Technical Analysis: Nikkei 225 Seems to Get Comfy Above 20,000
Talking Points:
- The Nikkei was on the launchpad when last we visited.
- Now it seems to have been launched
- But the 20,000 level is both prize and warning
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When I looked at the Nikkei last week, I suggested that it was probably “on the launch pad” for a push higher, even if there might be some doubts about the quality of its support.
And the dear old index proved me right in short order with an impressive June 2 push above the 20,000 level for the first time since December 2015.
The Nikkei’s two sharp consecutive daily rises of June 1 and 2 have put the uptrend from this year’s April lows back on track. Interestingly they are also virtual mirror images of the two big daily slides of May 16 and 17 which threatened it.
Now admittedly there has been no obvious great appetite to push on any further from those two bullish days. But there’s been no rush to take cash off the table either. And with the Nikkei still above 20,000, that’s probably very telling.
Perhaps more remarkably the index has yet to stray into what most analysts would regard as conclusively “overbought” territory either. The Relative Strength Index remains below the 70 level which can be a warning sign, even if it is only below it by a whisker and has risen steadily since the end of May.
Indeed, “overbuying” has not been a feature of this index in 2017 at all by this criterion, aside from a brief burst in early May,
The trouble of course is that 20,000 is both a prize and a warning to investors. Forays above this level may not be unknown, but they have tended to be short-lived, measured in months if not weeks. This means that investors may not be psychologically ready for a long stay and – understandably – prone to bail if the screens go red.
Still, the uptrend is clearly holding, and its lower bound is not immediately threatened. The Nikkei can certainly push on for now. Just watch that RSI.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
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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