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S&P 500 Starting to Flex its Muscles, DAX & FTSE Trying to Rally

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S&P 500 Starting to Flex its Muscles, DAX & FTSE Trying to Rally

Talking Points:

  • S&P 500 price action turns bullish, rallies on U.S. jobs report
  • DAX trying to put together a rally, calendar light in coming week
  • FTSE remains in recovery mode, has big resistance ahead

To see the DailyFX analysts’ Top Trading Opportunities for 2018, check out the DailyFX Trading Guides page.

S&P 500

On Friday, the U.S. jobs report showed 313k jobs added to the U.S. economy during the month of February, beating the +205k consensus estimate for NFPs. The average hourly earnings figure (an inflation gauge) missed the 2.8% estimate with a print of 2.6%, which helped fuel a jump in pre-market futures. Next week holds a few ‘high’ impact data points via CPI on Tuesday, Retail Sales on Wednesday, then UofM Sentiment on Friday.

The market surged 1.74% on Friday, breaking out above the trend-line running of the high and closing near a recent peak at 2789. With the Nasdaq 100 trading at record highs, it looks like the other major indices will try and keep up and make a move on records of their own. A breakout above 2789 will further along this notion and build on the already higher low in place on March 2nd by putting in a higher high in the sequence since the Feb spike-low.

S&P 500: Daily

S&P 500 Starting to Flex its Muscles, DAX & FTSE Trying to Rally

DAX

On Thursday, the DAX reacted positively to the ECB, rallying 200 points from high to low following the meeting with the help of a weakening euro. Looking ahead to next week, there are no ‘high’ impact events on the docket. For a list of all economic data with estimates and release dates/times, see the economic calendar.

The DAX is doing its best to recovery, but so far is still having the look of a counter-trend rally rather than a renewed rally. However, with the leading U.S. market pointed higher the DAX could start to follow along, with even more help if the euro trades sideways to down. Last week the market took out a steep trend-line off the record high, but given its angle it isn’t viewed as all that important; more work is still needed to turn the picture out-right bullish.

On further strength, the first notable level of resistance arrives at just over 12600, while support clocks in at just above 12k, then down below 11900. If the market sinks back to the low-end of support, the risk of another leg lower increases significantly. With risk appetite getting a bid, though, it seems unlikely the DAX will sell off to that extent; it’s more likely to be a laggard on the upside than anything at this time.

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DAX: Daily

S&P 500 Starting to Flex its Muscles, DAX & FTSE Trying to Rally

FTSE

The economic calendar is bare for the most part next week in the U.K., but focus will continue to be on any ‘Brexit’ news which is released. General risk trends remain a factor at play here. Keep an eye on the U.S. markets for further indications as to which way global stocks as a whole may want to go. They look headed higher as noted with the U.S. markets earlier.

The FTSE, similar to the DAX, is bouncing but not yet looking all that convincing. The raly comes after a fake-out breakdown on March 2. The low at 7062 will be important to hold if the footsie is to keep from declining. Resistance arrives around the all-important 7300-level, a threshold which it needs to reclaim if it is to have a chance at making a meaningful run.

FTSE: Daily

S&P 500 Starting to Flex its Muscles, DAX & FTSE Trying to Rally

—Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at@PaulRobinsonFX



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Forex

DAX & CAC Technical Outlook – More Strength Ahead?

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DAX/CAC Technical Highlights:

  • DAX yet to show signs of reversing despite resistance
  • Big-picture topping potential remains
  • Strength has the CAC trading in ‘open space’

Check out the DailyFX Q2 Forecasts for the DAX, CAC, Euro, and other major markets; see how our Trading Opportunities for 2018 doing too – DailyFX Trading Guides.

DAX yet to show signs of reversing despite resistance

The DAX rally off the lows found opposition last week after a slight breach above a swing-high in February and just below the 200-day MA, however; the reversal sparked only very minor selling. Yesterday’s turn back higher has the market geared up to take on the 200-day and better.

On a breakout above the 200, a thorough testing of the underside of the double-top from November-January should be in play. The zone extends from 12745 up to the mid-12800s and is likely to prove problematic. How problematic, we’ll need to wait and see.

Should we see a strong rejection, then we’ll perhaps flip the script to a short bias, but if it is anything like what we saw this past week, then we’ll need to respect the trend off the March low. There is still the possibility that we see a long-term top develop should we see a strong turn down in the weeks ahead.

We’ll delve more into the ‘head-and-shoulders’ top scenario at a later time should it become relevant. If this scenario is to come to fruition, it’s worth noting that the DAX shouldn’t climb too much higher from current levels.

See this guide for 4 ideas on how to Build Confidence in Trading.

DAX Daily Chart

DAX daily chart with price levels

Strength has the CAC trading in ‘open space’

Of the two big Euro-zone indices, the CAC has been an absolute monster off the late-March low. Nothing has provided any real opposition, not the 200-day MA, not the late-Feb swing-high. Looking higher, there isn’t much preventing the index from trading higher towards the January high, 2007 trend-line.

This doesn’t mean the index will necessarily get there without set-backs, or at all, but as far as quality price levels to lean on, resistance is difficult to come by. As long as we don’t see a strong turnabout in momentum, the benefit of the doubt remains with the long-side. Support first clocks in at the Feb swing-high around 5363.

Heads up, the ECB meets on Thursday. For live coverage, you can join my colleague Nick Cawley at 11:30 GMT time.

CAC Daily Chart

CAC daily chart

Forex & CFD Trader Resources

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

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You can follow Paul on Twitter at @PaulRobinsonFX



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Key Reversal Targets 2017 Slope Support

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The British Pound has fallen more than 3% off the yearly highs with the decline taking out the April opening range lows. While the broader outlook does remain constructive, near-term the risk for a pullback in price has us looking for a possible exhaustion lower down near structural support.

GBP/USD Daily Price Chart

GBP/USD Price Chart - Daily Timeframe

Technical Outlook: In my last Weekly Technical Outlook we noted that Cable was approaching the 2018 highs at 1.4346 with a breach above this threshold needed to keep the broader long-bias in play. Price posted an outside-weekly reversal off this threshold before break below the objective April opening range lows yesterday. The decline also validates a break of the November slope line and leaves the risk lower while below the monthly open at 1.4024.

Note that yesterday’s close marked the fifth consecutive daily decline – three of the last five instances of such an occurrence saw a slight reprieve (a day or so) before registering a new low. That said, look for initial support along the lower parallel.

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GBP/USD 240min Price Chart

GBP/USD Price Chart - 240min Timeframe

Notes: A closer look at price action sees Cable trading within the confines of a near-term descending pitchfork formation extending off the March highs with this week’s decline slipping below the monthly range lows / 61.8% retracement at 1.3965. IF this break is legit, topside advances should be capped by the weekly highs / monthly open resistance at 1.4024/31. A break lower from here targets the lower parallel / 100-day moving average at 1.3854/67 with broader bullish invalidation for the multi-year uptrend at the March low-day close at 1.3775.

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Bottom line: The British pound has broken below the monthly opening range but looks like the decline may be losing some steam here near-term. From a trading standpoint, we’ll favor fading strength while below median-line of the descending pattern with the decline to ultimately offer more favorable long entries near long-term slope support.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

GBP/USD IG Client Positioning

GBP/USD Client Sentiment

  • A summary of IG Client Sentimentshows traders are net-long GBPUSD- the ratio stands at +1.33 (57.0% of traders are long) – weak bearishreading
  • Long positions are 15.2% higher than yesterday and 83.1% higher from last week
  • Short positions are 0.5% lower than yesterday and 42.6% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBPUSD-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!

Relevant Data Releases

GBPUSD Economic Calendar

Other Setups in Play

– Written by Michael Boutros, Currency Strategist with DailyFX

To receive Michael’s analysis directly, sign-up to his email distribution list

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

https://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2017/06/09/Introduction-to-Basic-Pitchfork-Median-line-Analysis.html?ref-author=Boutros



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Respect New Uptrend For Now

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Talking Points:

  • The ASX 200 is climbing again
  • Range trade has given way to a new upside channel
  • That channel will take it up to 6000, however, and there bulls should probably worry

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The ASX 200 broke out of its ascending channel to the downside mid month, but price action since suggests that its subsequent consolidation may have been mere prelude to another upward foray.

The index has been admittedly rangebound since, trading between. April 16 and 17’s intraday low of 5831.1 and the intraday high of April 23 and 19 at 5904.9. At the time of writing (0100 GMT Tuesday) that range is history, if only just with the index a bare half dozen points above the top.

ASX 200 Technical Analysis:  Respect New Uptrend For Now

If it can close above there, then the 5934-5971 region last traded in mid-March could form the next target for the bulls. However above that the 6,000 level beckons and that barrier has proved too much for the index so often, both in the recent past and, indeed, for the past decade, that it’s probably wise to expect plenty of cashing out should it get there again.

Downside support may come in at the base of a new, nascent uptrend channel, which is at 5857.8 on Tuesday. Below that there is likely to be a cluster of near-term props forming in sum a band between April 10’s highs around 5848 and April 2’s closing low of 5686.

ASX 200 Technical Analysis:  Respect New Uptrend For Now

Still the uptrend should probably be respected for the moment, with the ASX currently in the middle of it. The Sydney stock benchmark’s simple moving averages fail to suggest anything obviously amiss, with the 20-50- and 100 day version in rank order and nicely spaced. The index’s Relative Strength Index is nudging higher, as you’d probably expect given the nice little run-up seen this month. However at a stolid 59 it doesn’t suggest any vicious overbuying.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!



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