Analys från DailyFX
The CAC 40 Trades to Monthly Lows
Talking Points
- The CAC 40 Trades Down -2.20%
- Price has Broken Pivot Support at 4,274
- SSI Reads Bearish at +2.67
CAC 40 Daily Chart
(Created using Marketscope 2.0 Charts)
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The CAC 40 has traded to a new monthly low this morning, and currently down -2.20% on the day. If prices close the day lower, this will mark the fourth daily decline in the last five trading days for the Index. Peugeot is leading the Index lower, trading off -5.79% so far. Currently Nokia is the only CAC 40 component trading higher, up 0.72%.
Technical traders should note that if prices close at present levels, it would represent the first daily close below the previously discussed value of range support at 4,305. Day traders should also note that prices are currently trading below today’s S4 Camarilla pivot, which is found at a price of 4,274. If prices continue to trade below this value, it opens the CAC 40 up for further declines on continued bearish momentum. In this scenario, traders may extrapolate today’s 55 point range to find initial bearish targets near 4,219.
In the event of a bullish reversal, traders should first look for prices to rise above the S4 pivot. If bullish momentum continues, this action should be followed by an advance above the S3 pivot at 4,302. A movement to this point on the chart would then open the CAC 40 to close back inside of the previously mentioned value of range support at 4,305. In this scenario, this morning’s bearish breakout would be considered invalidated.
CAC 40, 30 Minute Chart
(Created using Marketscope 2.0 Charts)
SSI (speculative sentiment index) for the CAC 40 (Ticker: FRA40) is currently reading at +2.67. This value has increased from +1.88 in our last report. When taken as a contrarian signal, this increase in sentiment may suggest a bearish bias for the Index. Alternatively, in the event of a bullish reversal, traders should look for SSI to move from its current positive extremes towards more natural values.
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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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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
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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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