Connect with us

Forex

Dow Turns an 8-Day Advance, Dollar Ratchets Up the Bullish Pressure

Published

on


Talking Points:

  • US equity indices turned pause into decline Tuesday, but this didn’t seem a wide risk move on events like North Korea fears
  • Dollar posted a strong rally alongside the charge in 10-year Treasury yields to 7-year highs but key levels are still ahead
  • Pound and Euro face Brexit and Italian dissent, but it is the Kiwi and Swiss franc that still present the appealing setups

See how retail traders are positioning in the FX majors, indices, gold and oil intraday using the DailyFX speculative positioning data on the sentiment page.

Risk Trends Sour but it is US Equities Leading the Way

Speculative sentiment started off the week on shakey ground, but it started to genuinely slip through Tuesday’s session. Taking their position as symbolic leader of risk trends seriously once again, the US equity indices were opened this past session with sizable gaps down on the the open. The selling pressure gained a little more traction through the active trading hours without tipping into a full-tilt bear trend. The S&P 500 curbed its bullish breakout bid, the Nasdaq 100 is starting to form a right shoulder through a head-and-shoulders pattern, and the Dow broke its longest streak of daily gains (8) in 12 months. The damage done in altitude loss may be modest, but the impact on already flimsy conviction can prove more crippling than many appreciate. Looking further afield on the risk spectrum, there isn’t evidence of a full buy-in. Europen equities were steady, Yen crosses didn’t commit but emerging markets certainly felt the pain. Currencies like the Brazilian real, Turkish lira and Indian rupee suffered mightily to the US dollar.

Dow Turns an 8-Day Advance, Dollar Ratchets Up the Bullish Pressure

Dollar: Not Ready to Capitulate Just Yet

The fundamental drive behind the Greenback may be an uneven mix of half stabile drivers, but it is nevertheless keeping the currency buoyant. Facing a recent slip, the DXY Index staged an impressive rebound Tuesday to plug the hole it had sprung following a month-long recovery effort. The currency’s rally earned a noteable break for USD/JPY above 110 with a long-term trend break for the battered NZD/USD, but the progress was far less ‘critical’ elsewhere. For EUR/USD, a return to the 2018 low was as good as it would get. The jump for GBP/USD, USD/CHF and AUD/USD would simply build a little favorable pressure in recently established ranges. If you were looking for the signal for Dollar bidding in the docket or headlines, you wouldn’t find much. Aside from housing data that offers little regular market moving, the Fed speak on tap struke familiar chords. The testimony of two Fed candidates – Clarida and Bowman – raises the potential of a heavier hawkish skew in the Board, but that hardly seems a relaible ladder rung. A moderate risk appetite, monetary policy advantage, speculative bid and counterpart pain can combine to gains moving forward; but it is not an easy mix to keep.

Dow Turns an 8-Day Advance, Dollar Ratchets Up the Bullish Pressure

Key Fundamentals without Key Move: Pound, Euro and Yuan

We have registered some remarkable fundamental developments for key currencies this past session that resulted in very unimpressive market moves. A run of Chinese data offering a miss on Chinese retail sales and industrial production along with the new offer of the country’s jobless rate resulted in little tangible USD/CNH response as we would expect from a managed exchange rate. A little more surprising was the limited response from the Sterling to the UK data. The jobless claims change jumped more than three times the forecast with an uptick in the claimant count rate. Add to that the Scottish Parliament offering more trouble for Britains withdrawal proposal and news that a Brexit white paper will come out next month, and it is impressive that GBP/USD would take out its range low with the Dollar’s performance. From the Euro, a concerning headline of demands from Italy’s Five Star and League didn’t gain much rotation amid updates like North Korea’s threat to cancel the summit with President Trump. Demands that 250 billion euros in ECB purchased Italian debt be forgiven, reform of European treaties and making easier to exit the EU are troubling. Yet, the Euro didn’t seem too troubled looking around at the broad performance beyond EUR/USD.

Dow Turns an 8-Day Advance, Dollar Ratchets Up the Bullish Pressure

Impressive Moves with Less Fundamental Source

In contrast to the heavy-news-light-action mix above; the Kiwi dollar, Swiss franc and gold were doing much more with less. The docket was essentially open for the New Zealand currency, and yet the pain continued with a critical extension on NZD/USD. This is not a free to roam bear run however as GBP/NZD, EUR/NZD and NZD/JPY are near the boarders of critical technical levels. If the pain continues, these are pairs that should be watched closely – but even if it makes a bid for recovery, these are still strong opportunities. From the Swiss franc, we don’t expect a traditional fundamental response; but it is clear that EUR/CHF exerts particular influence. The pair made a more threatening correction this past session and pairs like CAD/CHF pose impressive opportunity. Even gold put in for an impressive day. Certainly the strength for the Dollar and 10-year Treasury yield contributed to the metal’s problems, but the break from a month’s-long range was still a surprise. Looking to retail speculative interest, traders are confident range conditions will kick back in with extreme net long interest on virtually no short exposure. Beware extreme conviction as it can prove to be delusion. We discuss all of this and more in today’s Trading Video.

Dow Turns an 8-Day Advance, Dollar Ratchets Up the Bullish Pressure



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Forex

Dow Jones, DAX 30 and FTSE 100 Technical Forecast

Published

on

By


Dow Jones, DAX 30 and FTSE 100 Technical Forecast:

  • The Dow Jones faces considerable nearby resistance
  • The DAX 30 enjoys nearby trendline support, but must surmount a Fib level to press higher
  • To the delight of technical traders, the FTSE 100 will have to unravel two conflicting candlestick patterns

Dow Jones, DAX 30 and FTSE 100 Technical Forecast

Amid a whirlwind of trade war developments, equity markets across the globe had to negotiate significant volatility. After the S&P 500 posted its largest gap lower since 2009 on Monday, US equities had their work cut out for them – but were able to recoup most losses. In the days to come, equity markets will continue to struggle with the same themes. Expect technical levels to be strained, especially if volatility persists.

Dow Jones Technical Forecast: Bearish

The Dow Jones ended the week marginally lower than it closed the Friday prior. More importantly however, the Index resides beneath two nearby Fib levels – the 61.8% retracement from March to May at 25,775 and the 78.6% at 23,823. Each level will look to provide resistance early next week. If those levels are surpassed, the 50% level at 25,952 will come into play. The area rebuked prices multiple times last week and should play a similar role next week.

Dow Jones Price Chart: 4 – Hour Time Frame (February – May) (Chart 1)

DJI

How to Day Trade the Dow Jones

With considerable topside resistance, the Industrial Average will once again have its work cut out for it. If attempted rallies are curtailed, the 78.6% level around 25,523 may fortify prices. Beyond that, the 25,400 area should provide further buoyance, despite a break lower on Monday. The area marks March’s lows and provided moderate support last week.

DAX 30 Technical Forecast: Bullish

After a considerable surge last week, the German DAX seems to have its sights set on a continuation rally. Luckily for bulls, the 23.6% Fib level at 12,169 and an ascending trendline from December’s low will look to provide nearby support. The trendline previously marked the lower bound of the ascending channel the Index found itself in during the first-quarter rebound. Should the support hold, the channel may become pertinent once more.

DAX Price Chart: 4 – Hour Time Frame (April – May) (Chart 2)

DAX

Should the index continue higher, highs from last week – around 12,300, should pose initial resistance. Secondarily, the 61.8% Fib level at 12,331 will come into play. If both those levels are surmounted, subsequent resistance will be offered by the upper-bound of the channel and at 12,437 – the full extension of the Fib level from March’s lows to May’s highs.

FTSE 100 Technical Forecast: Bullish

The FTSE 100 closed Friday’s session to leave a perfect hanging-man candlestick on the daily chart. Although shorter time frames are typically better suited for weekly forecasts, the candlestick patterns are too clear to ignore. A hanging man candlestick at the top of an uptrend generally precedes a trend reversal, but what precedes the Friday candle may carry more weight.

FTSE 100 Price Chart: Daily Time Frame (February – May) (Chart 3)

UKX

Prior to the hanging man, the candlesticks from the Tuesday through Thursday sessions form three white soldiers – in this case green soldiers. This candlestick pattern offers a bullish signal, usually preceding further gains. With the conflicting candlestick signals, technical traders will have a lot to look for next week.

That said, the most likely outcome – in my opinion – is a brief retracement early in the week to fulfil the hanging man prophecy and to consolidate. In this scenario, the 23.6% Fib level at 7,296 would pose as critical support. Once the consolidation is underway, the three white soldiers may drive the FTSE 100 higher as the week progresses. For follow up on these technical patterns, or to ask any questions, follow @PeterHanksFX on Twitter.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Gold Price Plummets, Seeks Technical Support Near May Lows

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Looking for a fundamental perspective on Equities? Check out the Weekly Equity Fundamental Forecast



Source link

Continue Reading

Forex

S&P 500, DAX Fundamental Forecast

Published

on

By


Equity Analysis and News

  • S&P 500 | Trade War Tensions Dictating Price Action
  • DAX | EU/US Trade Dispute is Delayed, Not Resolved

FTSE

Source: Thomson Reuters, DailyFX

S&P 500 | Trade War Tensions Dictating Price Action

The S&P 500 is on course to drop over 0.5% for the week as investor angst over US/China trade wars continues to weigh on risk appetite, most notably in the US benchmarks. However, while a mid-week bounce has seen losses pared slightly since the escalation with the S&P 500 now down 3% (Prev. -5.4%), the trade sensitive sectors have maintained their losses with the US Semiconductor Index down 10% (Prev. -11%). Consequently, focus will continue to remain trade wars.

SPX

Markets Pricing in Fed Rate Cuts

The Federal Reserve have continued to maintain the mantra that they will be on hold for the foreseeable future and that there is little reason to provide a cut. However, bonds markets have continued to price in Fed easing, with money markets fully priced for a rate reduction in December. Alongside this, the 3M/10yr US yield curve has continued to dip into inversion amid the rising trade war tensions. The upcoming week will see commentary from Fed Chair Powell, however, with markets pricing in a dovish Fed, the bar is high for Powell to match those dovish expectations as was evidenced in the post monetary policy decision speech on April 24th, in which the Chair noted that soft inflation was “transitory”.

FED

Source: DailyFX, Thomson Reuters

DAX | EU/US Trade Dispute is Delayed, Not Resolved

A firm week for the DAX, which recorded gains of over 1%, among the major factors behind this had stemmed from source reports stating that the Trump Administration were to delay imposing auto-tariffs on EU imports for an additional 6-months (full story), which in turn saw the European auto names surge. The decision to delay could largely be attributed to the fact that US/China tensions have escalated. However, this is merely a delay and not a resolution. Noteworthy calendar events: ECB Draghi & Praet (Thurs), Eurozone PMIs (Thur).

DAX Price Chart: Daily Time Frame (Jan 2019May 2019)

DAX

RESOURCES FOR FOREX & CFD TRADERS

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

Looking for a technical perspective on Equities? Check out the Weekly Equity Technical Forecast



Source link

Continue Reading

Forex

Euro Weakness to Remain the Theme

Published

on

By


EURUSD Technical Highlights:

  • Euro looks headed towards the April low or worse
  • 4-hr chart has a developing structure to pay attention to

Check out the DailyFX Trading Guides page for intermediate-term forecasts, educational content aimed all experience levels, and more.

Euro looks headed towards the April low or worse

To be clear, trading EURUSD lately hasn’t been an easy endeavor as low volatility conditions continue to be a headwind for traders. We’ve seen some movement in other majors (GBPUSD in particular) but not in the most widely traded pair. That will eventually change, but until it does we have to continue to take what is presented to us and be patient with set-ups.

With that said, the general trading bias remains the same as it has for months – lower. Trend and price action continue to be supportive of this bias. A run on the April low at 11109 or worse looks to be in store sometime in the coming sessions, but the path could be a little shaky.

Dialing in a bit closer to the 4-hr time-frame, a channel is becoming visible even if it isn’t perfect, with candlestick wicks clouding the picture. A small bounce from the lower parallel may make for the best scenario, as the lower parallel’s importance is further cemented and a nearby low is created in the process.

A bounce and subsequent breakdown could offer a solid structure (see 4-hr chart) for would-be shorts from both a probability and risk/reward standpoint. Selling right here at support puts one at risk of a bounce with good stop placement difficult to determine.

A bounce that carries the euro beyond 11225 will give pause to sellers and bring into play the area around 12265 (recent highs/trend-lines) and possibly become an even more attractive spot to short. The bottom line is that the Euro looks headed lower, but it may pay to sit tight and wait for a better look before entering new positions. If currently in a short from higher levels, then one could use the aforementioned highs and trend-lines to manage risk accordingly.

Check out the IG Client Sentiment page to find out how changes in positioning in major markets could signal the next price move.

EURUSD Daily Chart (April low, 11000s could be soon)

EURUSD

EURUSD 4-hr Chart (Channel/Bear-flag)

EURUSD

Helpful Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

Looking for a fundamental perspective on The Euro ? Check out the Weekly EUR Fundamental Forecast



Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.