Support & Resistance

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EUR/USD Technical Analysis: Euro Down Trend Remains Intact

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro approaching key resistance near 1.19 figure after spirited recovery
  • Chart positioning continues to favor a broadly bearish bias in the near term

The Euro has mounted a spirited recovery against the US Dollar after finding support near the 1.17 figure but the dominant trend bias still favors weakness. Near-term positioning continues to be defined by a series of lower highs and lows, painting recent gains as corrective (at least for now).

From here, a daily close above the 1.1900 figure (trend line, 23.6% Fibonacci expansion) opens the door for a challenge of the 1.2041-70 area (38.2% level, August 29 high). Alternatively, a reversal back below the 14.6% expansion at 1.1812 exposes the 1.1711-21 zone (38.2% Fib retracement, October 5 close).

The second half of a short EUR/USD trade triggered at 1.1849 has been stopped out at breakeven after profit was booked on the first half of the position. An actionable bearish reversal signal is now needed to re-establish the trade. In the meantime, opting for the sidelines seems most prudent.

See our Q4 forecast to learn what will drive trends for the Euro and the US Dollar through year-end!

EUR/USD Technical Analysis: Euro Down Trend Remains Intact


The Short-Term Reason for JPY’s Stubborn Strength You Should Know

Position Trading based on technical set ups, Risk Management & Trader Psychology.

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Talking Points:

  • USD/JPY Technical Strategy: awaiting reversal higher
  • USD/JPY approaching short-term support near 111.47 figure after spirited recovery
  • Sentiment Highlight: net-short retail bias gives preference for upside prevailing

The price of USD/JPY has fallen back after mounting a spirited recovery thanks to the US Dollar recovery from early September. Traders remain inclined to favor upside strength once the key market risk for Japan is cleared. On October 22, Japan will go to the polls thanks to a snap election called by PM Shinzo Abe where a victory may assure him the longest tenure of a PM in Japan’s post-war history.

Near-term positioning currently has been dominated by protection on aggressive JPY strength as identified by the options market. Short-term options that cover the October 22 election have surged to protect against a shock defeat of Abe. As the name implies, the outcome is wholly unexpected by institutions have learned to expect or at least protect against the unexpected thanks in large part to the Brexit and Donald Trump election outcomes. Should the election hand further control to Abe, the election hedge would likely expire worthlessly, and USD/JPY could catch up to risk assets like the Nikkei, which recently closed at the highest level since 1996 or the SPX55 that sits at all-time highs.

From current levels, a daily close below the 111.47 figure (late September pull-back low) opens the door for a challenge of the 111.10-109.65 area (38.2-61.8% retracement level of Sept.-Oct. range.) Alternatively, a reversal and close above 112.08 (weekly opening range high) exposes short traders to a sharp and painfulrise to the 112.31/52 zone (Oct. 12/13 high) followed by the monthly intraday high of 113.44.

Unlock our Q4 forecast to learn what will drive trends for the Japanese Yen and the US Dollar through year-end!

The Short-Term Reason for JPY’s Stubborn Strength You Should Know

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

USD/JPY Insight from IG Client Positioning: net-short retail bias gives preference for upside prevailing

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

The Short-Term Reason for JPY’s Stubborn Strength You Should Know

USDJPY: Retail trader data shows 45.7% of traders are net-long with the ratio of traders short to long at 1.19 to 1. In fact, traders have remained net-short since Oct 06 when USDJPY traded near 112.802; theprice has moved 0.9% lower since then. The number of traders net-long is 18.2% higher than yesterday and 14.3% higher from last week, while the number of traders net-short is 9.6% higher than yesterday and 17.9% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDJPY prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias (emphasis added.)

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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GBP/USD Technical Analysis: The Sliding Scales of Support

Price action and Macro.

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Talking Points:

- The British Pound is recovering from a nasty sell-off that enveloped the Pound in the final week of September leading into the first week of Q4.

- GBP/USD has moved back above a key zone of resistance that runs from 1.3117-1.3187.

- GBP is a central part of the DailyFX Forecasts – Click here for full access.

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In our last article, we asked if the British Pound’s bullish trend was ready for continuation, and while it took a few days after that article for support to set-in, we may be nearing bullish resumption in Cable.

After an aggressive topside breakout showed-up after the September BoE meeting, GBP/USD ran all the way from sub-1.2800 in August to over 1.3600 by mid-September. The pair spent about a week trying to carve out a higher-low on a key Fibonacci level of 1.3478; but after continually failing to sustain a break above 1.3600, a bull flag began to form before support slowly gave way as sellers took over to drive prices back towards the 1.3000 psychological level.

GBP/USD Four-Hour: Retracement of Prior Bullish Trend Runs into Support Above 1.3000

GBP/USD Technical Analysis: The Sliding Scales of Support

Chart prepared by James Stanley

The U.S. Dollar received a quick gust of strength around last week’s Non-Farm Payrolls report; but after running into a key zone of resistance, sellers came back-in to the Greenback and this helped to bring GBP/USD higher. That move-higher has continued into the early part of this week, and at this point, GBP/USD is working with a couple of interesting permutations of resistance. We’ve already broken above the descending trend-line of the bearish move, and we’re now resisting the under-side of the 50% Fibonacci retracement of the August bullish move in the pair.

GBP/USD Four-Hour: Bullish Break of Bearish Trend-Line, Fibonacci Resistance at 1.3216

GBP/USD Technical Analysis: The Sliding Scales of Support

Chart prepared by James Stanley

The strength that’s shown-up in GBP/USD since the aftermath of last Friday’s NFP report has been rather smooth and consistent, riding along an aggressively-sloped bullish trend-line on the hourly chart (shown below in Blue). And while this could look attractive for bullish continuation, traders will likely want to wait for a bit of additional confirmation before looking to chase the move higher, as we have yet to cross the 38.2% retracement of the recent bearish move. With potential resistance running from 1.3267-1.3300, traders could wait for price to move into this zone to signal a greater probability of bullish continuation, at which point they could look to buy higher-low support around the 1.3200-1.3216 area.

Alternatively – traders can look to use inside price action by waiting for support to develop and hold around the zone that runs from 1.3175-1.3187. Each of these levels are derived from Fibonacci retracements, with 1.3175 being the 23.6% retracement of the most recent bearish move. If price action cannot sustain support above this level, the prospect of bullish continuation will look considerably less likely and bullish positions will no longer be favored.

GBP/USD Technical Analysis: The Sliding Scales of Support

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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USD/CHF Technical Analysis: Dollar-Driven Strength Begins to Wane

Price action and Macro.

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Talking Points:

- USD/CHF set a fresh four-month high earlier in the month as USD-strength continued into Q4.

- Price action fell back-below a key level last week, and we’re now seeing resistance show around prior support.

- Want to see the DailyFX Q4 Forecast on USD? Click here for full access.

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While much of the world has been watching Euros, U.S. Dollars and British Pounds, the Swiss Franc has begun to show a series of interesting setups. In USD/CHF, the pair finally broke above resistance at .9770 earlier in the month as USD-strength continued into the open of Q4. Bulls were unable to sustain the top-side break, however, and after prices retraced back below that prior point of resistance, a range had developed over the final few days of the week.

USD/CHF Hourly: Dollar-Driven Bullish Run Loses Steam Above .9770 Resistance

USD/CHF Technical Analysis: Dollar-Driven Strength Begins to Wane

Chart prepared by James Stanley

Given the prior proclivity of the pair to stick to range-like, mean-reversion tendencies; combined with the prior support and resistance structure that had set-in, this could become usable for traders forward-looking approaches in USD/CHF.

USD/CHF Daily: Bulls Unable to Sustain Breakout Above .9770

USD/CHF Technical Analysis: Dollar-Driven Strength Begins to Wane

Chart prepared by James Stanley

Continued resistance around the .9770 level opens the door for short-side setups. Traders can look at stops above either of the two recent swing highs, with aggressive stances looking above .9808 while more conservative takes will likely want to look above .9737. Short-side targets can be investigated at the prior swing-low around .9707, at the Fibonacci level around .9684, the prior swing around .9650 and then .9575.

USD/CHF Hourly: Lower-High, Resistance at .9770 Opens Door for Short-Side Setups

USD/CHF Technical Analysis: Dollar-Driven Strength Begins to Wane

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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AUD/USD Technical Analysis: Bias Still Bearish at Key Support

Fundamental analysis, economic and market themes

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Talking Points:

  • AUD/USD Technical Strategy: Short at 0.7970
  • Aussie Dollar attempting to launch recovery from familiar range support
  • Near-term trend structure continues to argue in favor of a downside bias

The Australian Dollar is attempting to a recover against its US counterpart after testing range floor support limiting downside momentum since mid-July. Near-term price action continues to be defined by a series of lower highs and lows however, arguing for a bearish bias that is still in place.

From here, a daily close above support-turned-resistance at 0.7908, the September 22 low, opens the door for the retest of a formerly broken rising trend line at 0.8006. Support remains in the 0.7808-19 area (August 15 low, 38.2% Fibonacci retracement). Breaking below that exposes the 50% level at 0.7725.

The short AUD/USD position initiated at 0.7970 hit its initial objective and partial profit has been booked. The rest of the trade continues to be in play to capture any follow-on weakness. The stop-loss has been revised to the breakeven level.

What do retail traders’ buy/sell decisions hint about coming AUD/USD moves? Find out here!

AUD/USD Technical Analysis: Bias Still Bearish at Key Support

CAD Weakness becomes an October Theme as Hawkish BoC Pulls Back

Position Trading based on technical set ups, Risk Management & Trader Psychology.

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Talking Points:

  • USD/CAD Technical Strategy: strong resistance at 1.2778, awaiting sell opportunities
  • USD/CAD ST support focus at 1.2438approaching key resistance near 1.19 figure after spirited recovery
  • Sentiment Highlight: overall selling bias provides ST bullish outlook

The Canadian Dollar has continued to fall away from the impressive strengthening that took many by surprise over the summer. The rally from early May was driven by the Bank of Canada forecasting and fulfilling rate hikes in 2017 that previously were not priced into the market. This relationship showed up first between the narrowing yields of US and Canadian two-year sovereign yield spreads.

At the beginning of October, the market was pricing in a 2/3 chance of another BoC hike before the calendar turned, and now the probability has dropped to 46% with an 80% chance of a hike in January. At the same time, since late August, Canadian economic data has underwhelmed economist’s expectations.

The under-performance of economic data is important and Canadian Dollar weakness has accelerated since Bank of Canada Governor Stephen Poloz has said that the bank is in “intense data-dependent mode” on future hikes and that growth will moderate. These comments on Monday took the Canadian Dollar across the board losing the most to the Japanese Yen and was worth a 0.6% drop against the USD that gave way to CAD falling to 1.2545 to the US Dollar

The technical outlook is focusing on further rises against the broader downtrend that began in early May. Short-term support is the 1.2520-1.2468 zone (Oct 13 high, 55-DMA.) Below this zone, a daily close below the 1.2433 figure (Oct. 12 low) opens the door for a return to the downtrend. Currently, a hold above the 1.2433 area favors a march toward 1.2723-78 zone (38.2% retracement of May-Sept. range, Aug 15 high.)

Unlock our Q4 forecast to learn what will drive trends for the US Dollar through year-end!

CAD Weakness becomes an October Theme as Hawkish BoC Pulls Back

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

USD/CAD Insight from IG Client Positioning: overall selling bias provides ST bullish outlook

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

CAD Weakness becomes an October Theme as Hawkish BoC Pulls Back

USDCAD: Retail trader data shows 48.3% of traders are net-long with the ratio of traders short to long at 1.07 to 1. The number of traders net-long is 4.4% higher than yesterday and 9.7% lower from last week, while the number of traders net-short is 4.2% lower than yesterday and 45.7% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDCAD trading bias (emphasis added.)

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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NZD/USD Technical Analysis: NZ Dollar Ready to Turn Higher Again?

Fundamental analysis, economic and market themes

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Talking Points:

  • NZD/USD Technical Strategy: Flat
  • Bullish candlestick pattern hints Kiwi Dollar may be bottoming vs. US namesake
  • Technical confirmation, improved risk/reward needed for actionable trade setup

The New Zealand Dollar put in a bullish Morning Star candlestick pattern, hinting that a reversal higher against its US counterpart may be in the works. Interestingly, the currency seems to be finding strength despite continued political uncertainty after an inconclusive general election.

Near-term resistance is in the 0.7132-40 area (August 31 low, 23.6% Fibonacci retracement), with a daily close above that opening the door for a test of the 38.2% level at 0.7196. Alternatively, a reversal back below the 14.6% Fib at 0.7105 paves the way for another challenge of resistance-turned-support at 0.7054.

Prices are too close to resistance to justify entering long from a risk/reward perspective. Furthermore, the series of lower highs and lows defining the down move from the September 20 swing high is strictly speaking still in place. With that in mind, opting to stand aside seems most prudent for now.

Just getting started trading NZD/USD and need help with your approach? See our beginners’ guide!

NZD/USD Technical Analysis: NZ Dollar Ready to Turn Higher Again?

EUR/GBP Technical Analysis: Euro Down Trend About to Resume?

Fundamental analysis, economic and market themes

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Talking Points:

  • EUR/GBP Technical Strategy: Short at 0.8896
  • Euro may be resuming down trend started in late August vs British Pound
  • Short position initially aims for a challenge of support above the 0.88 figure

The Euro has broken support guiding the upswing from September lows, hinting that the down trend started in late August against the British Pound may be resuming. A set of bearish candlestick patterns and negative RSI divergence appear to have marked a top, as suspected.

From here, a daily close below the 38.2% Fibonacci expansion at 0.8819 opens the door for a test of the 0.8743-53 area (July 14 low, 50% level). Alternatively, a move back above support-turned-resistance at 0.8934 (October 9 close) paves the way for another challenge of 0.9033 (October 12 high).

A short EUR/GBP position was activated at 0.8896, initially targeting 0.8819. A stop-loss will be activated on a daily close above 0.8934. Profit on half of the trade will be booked and the stop-loss trailed to breakeven when (and if) the first objective is reached.

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EUR/GBP Technical Analysis: Euro Down Trend About to Resume?

EUR/JPY Technical Analysis: Fibonacci Support Holding Higher-Lows

Price action and Macro.

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Talking Points:

- EUR/JPY Technical Strategy: Retracement in bullish trend continues to hold higher-low support.

- The pair has oscillated within a ~140 pip range over the past two weeks, with multiple tests of support holding-up the longer-term trend.

- Want to see how Euro and/or Yen are holding up to our DailyFX Q4 forecasts? Click here for full access.

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In our last article, we looked at EUR/JPY moving-down to a key level of support. The pair put in quite the performance in the middle two quarters of 2017, jumping from a mid-April low below 115.00 to set a fresh 2017 high just a few weeks ago at 134.41. This move, of course, has been driven by a host of fundamental factors revolving around both the Euro and the Japanese Yen, and as we near what’s expected to be a pivotal European Central Bank meeting later in the month, that previously bullish move has continued to digest around higher-low support.

EUR/JPY Daily: Higher Low Holding Around Fibonacci, Trend-Line Support

EUR/JPY Technical Analysis: Fibonacci Support Holding Higher-Lows

Chart prepared by James Stanley

At current, both near-term support and resistance are being defined at least in-part by retracement levels from longer-term Fibonacci studies. The price of 132.05 is the 50% retracement of the 2008-2012 major move and this, along with the prior swing-high at 131.70 is helping to set current support. And on the resistance side, 134.41 is the 61.8% retracement of the 2014-2016 major move; and after two days of testing in mid-September, bears took over and brought prices down to that higher-low.

EUR/JPY Monthly: Long-Term Fibonacci Retracements Helping to Set Near-Term Support, Resistance

EUR/JPY Technical Analysis: Fibonacci Support Holding Higher-Lows

Chart prepared by James Stanley

Continued support around the longer-term retracement at 132.05 opens the door for bullish exposure in the pair. Traders can investigate stops either below 131.71 for a more aggressive approach, or below the prior swing at 130.56 for a more conservative stance with more room to work on the initial entry. For those taking the more aggressive approach, a re-test of the prior swing-high around 133.00 can be used to adjust stops to breakeven. The level of 134.41 is particularly interesting for bullish targets, as this Fib level had offered a couple of days of resistance previously; and if this is taken out, the psychological level at 135.00 becomes attractive for next topside targets.

EUR/JPY Four-Hour: Trend-Line, Fibonacci Support Helping to Hold the Higher-Low

EUR/JPY Technical Analysis: Fibonacci Support Holding Higher-Lows

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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GBP/JPY Technical Analysis: Bull Flag After Fresh One-Year Highs

Price action and Macro.

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Talking Points:

- GBP/JPY is attempting to recover from a recent swoon that saw more than 550 pips erased in a short three weeks.

- This brings question to the previously bullish trend, and a bull flag formation has formed as prices have retraced off of those fresh yearly highs.

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GBP/JPY is in an interesting spot. After the deluge in the British Pound on the heels of the Brexit referendum, GBP/JPY sank down to a fresh four-year lows around ¥123.00. Just a year earlier, the pair was testing resistance at ¥196.00. That’s 7,300 pips for those of you counting at home, and this accounted for a whopping drop of -37.2% of the pair’s value: And this is for a non-levered currency pair; not a stock of some small-cap company or a futures contract that’s usually prone to such rampant volatility.

After the flash crash in early-October, a semblance of support began to show in the pair, and after the U.S. Presidential Election in early-November, GBP/JPY ripped-higher as we approached the December rate hike from the Fed. Prices ran-up to the 61.8% retracement of the prior major move (taking the May 2016 high down to the October low), at which point resistance set-in and then held for the next nine months. Recurrent attempts to take out that high in May and again in July fell-short, with lower-highs printing during each instance.

GBP/JPY Daily: 61.8% Fibonacci Resistance Helped to Set the Top for Much of 2017

GBP/JPY Technical Analysis: Bull Flag After Fresh One-Year Highs

Chart prepared by James Stanley

In latter-August, that bullish theme began to show again in the British Pound, and in early-September, we heard the BoE warn that rate hikes might be on the horizon. In quick order, shorts were getting squeezed and prices were running higher towards the ¥150.00 psychological level.

After setting a new one-year high above the 152.50 psychological level, digestion began to show as prices moved-lower, falling below a number of key short-term support levels in the process. While this was happening, a bearish trend-channel formed during the retracement, giving us a bull flag formation in GBP/JPY.

GBP/JPY Four-Hour: Bull Flag in GBP/JPY

GBP/JPY Technical Analysis: Bull Flag After Fresh One-Year Highs

Chart prepared by James Stanley

At this stage, with price attempting to re-cross above that 61.8% Fibonacci retracement while also threatening a top-side break of the bearish channel, long positions can begin to look attractive. However, traders will likely want to remain cautious here, as the rate at which the sell-off in GBP/JPY showed-up suggests that something more than a garden variety pullback may be at work here.

There is a key zone of potential resistance just ahead of the ¥150.00 psychological level, and traders can use this in their forward-looking approaches on the pair. As long as price remains sub-¥150.00, bullish strategies should remain cautious. A top-side break of this level opens the door to continuation plays with eyes on a re-test of the ¥152.50 psychological level. On the bearish side of the pair, traders can look to today’s swing-low at ¥147.71 to open the door for short-side strategies. Short-side targets can be entertained at ¥146.90 and/or ¥146.00 even, as a projected trend-line taken from the initial ignition of the bullish move projects around this area. If we do see a down-side break of that trend-line, the bears are back and deeper targets can be accorded at ¥145.00 and then ¥143.47.

GBP/JPY Technical Analysis: Bull Flag After Fresh One-Year Highs

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Price action and Macro.

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Talking Points:

- USD/CHF resisted off of a key area again this morning. Should USD-strength continue, a bullish move over this resistance level can open the door to breakout strategies in Swissy.

- While USD weakness continued well into this month, USD/CHF has been range-bound since July, deductively highlighting a relatively weak Swiss Franc that could become attractive for continuation should USD-strength continue to show.

- Want to see how USD has held up to the DailyFX Forecasts? Click here for full access.

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The U.S. Dollar has had a rather rough 2017. In a down-trend that’s seen as much as -12.3% of the U.S. Dollar’s value erased, even while the Fed talks up additional rate hikes, few currencies have been able to keep pace with the Greenback’s declines. After coming into the year trading above the 1.0300 level, USD/CHF has seen as much as 925 pips taken-out as the pair has driven-lower.

But after running into support in mid-July around the .9433 level (the 2016 low), the declines have slowed as USD/CHF has built into a rather volatile range-bound pattern. Resistance has begun to build around the .9773 level, and we’ve seen multiple iterations of resistance show-up here; each rebuking USD/CHF’s upward advance.

USD/CHF Daily: Range-Bound Since Re-Test of 2016 Low

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

At this point, a top-side break of that well-worn resistance level could open the door to an attractive bullish breakout setup. Just above this area of resistance is another level of interest at .9813, as this is a prior swing-low point of support that also showed as a quick swing-high before the pair initially sank below .9770. This can be used in a couple of different ways. For traders looking at the more aggressive route of taking on bullish exposure on a break of .9775 (a few pips beyond the exact point of resistance), the level at .9813 can be utilized as an initial target and an opportunity to move the initial stop up to breakeven. Or, for those who want to approach USD/CHF a bit more conservatively, the .9813 level can be used to trigger the bullish breakout, with .9772 becoming an area to look to for stop placement in the effort of containing risk in the event that the breakout doesn’t continue-higher.

On the chart below, we’ve added five potential resistance levels above the .9813 inflection point, each of which has been derived from a prior price action swing and/or group of swings. Each of these can be used as potential targets should the bullish breakout continue if/when resistance is taken out.

USD/CHF Four-Hour: Potential Top-Side Resistance Levels Applied

USD/CHF Technical Analysis: Three Month Highs to Set Bullish Breakout

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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CAC 40 Breaks Range


Talking Points:

The CAC 40 has broken decisively lower this morning, with the Index trading down -1.31% so far for Thursday’s trading. This breakout concludes an extend range that the pair has been developing from May the 17th. Of the 40 listed CAC 40 stocks, only Vivendi is trading higher for the session (+0.30%). Top Losers for today’s trading include both Cap Gemini (-2.33) and Airbus (-2.05%).

Technically, with this morning’s breakout, the CAC 40 is again trending lower in the short term. The Index remains trading below its 10 day EMA (exponential moving average), which is found at 5,261.45. If prices continue to slide, traders may next look for support near the April 25th low at 5,158.50. In the event that the CAC 40 rebounds from today’s lows, traders should look for prices to trade back above the previously mentioned 10 day EMA. A bullish move of this nature would open the CAC 40 to potentially challenge the previous range high near 5,375.50.

CAC 40, Daily Chart with Averages

CAC 40 Breaks Range

(Created Using IG Charts)

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Sentiment totals for the CAC 40 remain net-long for Thursday. Currently IG Client Sentiment reads at +1.58 with 61.2% of traders net-long the Index. As this value remains slightly positive, it may be seen as interpreted as a bearish signal for the CAC 40. In the event that the CAC 40 continues to breakout lower, traders should watch sentiment to push up towards negative extremes of +2.0 or more. Alternatively if prices reverse and rally higher, sentiment totals may reverse and eventually flip negative.

CAC 40 Breaks Range

--- Written by Walker, Analyst for DailyFX.com

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Crude Oil Price Strengthens on Geopolitical Risk, Positioning

Position Trading based on technical set ups, Risk Management & Trader Psychology.

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Talking Points:

  • WTI Crude Oil Technical Strategy: Buying Dips Above
  • Crude Oil may approach 100% Fib extension at $53.94/bbl
  • Sentiment Highlight: positioning continues to favor a broadly bullish bias in the near term

The price of WTI Crude Oil has mounted a strong recovery after testing the polarity point on the chart between $49/51 per barrel. A polarity point is where prior resistance may act as future support. Oil traders should look to see if the price can continue to find support near the $50/bbl figure. Since summer, the dominant trend bias favors price appreciation. Near-term positioning per IGCScontinues to be defined by a series of lower highs and lows of net-long positions, which may pave the way for new longs to enter the market and chase price higher (at least for now).

Geopolitical tensions have arisen while many Intermarket correlations have broken down for Crude Oil. The geopolitical tensions are focused on US President, Donald Trump and the Iraq-Kurdistan tensions. The former may threaten to block a portion of exports from OPEC’s third largest producer while the latter brings concerns of disrupted flow as Chinese demand is at near-record levels. Both components are leading to buying pressure in the energy market.

From current pricing, a hold of a daily close above the $50.18 figure (Oct. 12 low) opens the door for a challenge of $52.83-53.94/bbl (September high, 100% Fib extension). Alternatively, a reversal and close back below $50.18 exposes $49.13 (October low, trend line pivot).

Unlock our Q4 forecast to learn what will drive trends for Crude Oil through year-end!

Crude Oil Price Strengthens on Geopolitical Risk, Positioning

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

WTI Crude Oil Insight from IG Client Positioning:positioning continues to favor a broadly bullish bias in the near term

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

Crude Oil Price Strengthens on Geopolitical Risk, Positioning

Oil - US Crude: Retail trader data shows 50.9% of traders are net-long with the ratio of traders long to short at 1.04 to 1. The number of traders net-long is 4.4% higher than yesterday and 15.4% lower from last week, while the number of traders net-short is 10.1% higher than yesterday and 21.0% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Oil - US Crude prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Oil - US Crude price trend may soon reverse higher despite the fact traders remain net-long (emphasis added.)

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Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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Gold Prices Cross $1,300 as Bulls Drive post-NFP

Price action and Macro.

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Talking Points:

- Gold prices found sellers today after an aggressively bullish week of price action last week.

- Non-Farm Payrolls earlier in October helped support build in Gold prices; and that move has largely continued into this week. After running into a batch of resistance around $1,300, are we on the cusp of a bearish reversal?

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Last month, we looked at Gold prices after a key zone of resistance came into play in the area that runs from $1,350-$1,375. Throughout the summer of last year, there were a series of resistance points that came in via price action. As the recent bullish run encountered this area, we asked if the bullish run was finished, and at least for the time being, it was. After that fresh One-year high was set in early-September, bears took over to create a retracement that ran for more than $95 from the September high to the October low.

Gold Daily: Lower After Running into Resistance (Maroon), Support Shows after NFP (Green)

Gold Prices Cross $1,300 as Bulls Drive post-NFP

Chart prepared by James Stanley

It was around the release of Non-Farm Payrolls on October 6th that support began to show in Gold prices. Buyers stepped-in just above the $1,260 level after an abysmal NPF print, and since then it’s been mostly a one-way show as prices have trended-higher, eventually crossing above the $1,300 level before resistance began to show around $1,306.

Gold Prices Gain > $45 From NFP Low to Weekly High

Gold Prices Cross $1,300 as Bulls Drive post-NFP

Chart prepared by James Stanley

The price of $1,301.35 is a key level in Gold prices, and can be seen above with the orange line on the chart. This is the 50% retracement of the post-Financial Collapse move in Gold prices, taking the low of $681.71 up to the $1,920.94 high.

Gold Weekly: $1,301.35 a Key Level, 50% of the post-Financial Collapse Move in Gold Prices

Gold Prices Cross $1,300 as Bulls Drive post-NFP

Chart prepared by James Stanley

If Gold prices are unable to hold support above $1,300 and perhaps more specifically $1,301.35, the door can be opened for a bearish retracement of this recent bullish move. The Fibonacci retracement drawn around that bullish move can assist with down-side targets around $1,296, $1,289, $1,284 and then $1,277.83, which is also a confluent level.

For the longer-term approach, traders will likely want to wait for some element of higher-low support to set-in before looking at topside exposure. While the bullish run in Gold prices over the past few weeks is attractive for continuation purposes, the lack of an adequate pullback can make continuation at this point a daunting prospect. If we do see support build-in around the $1,296 level, a case can be made for bullish continuation strategies with eyes on longer-term resistance areas around $1,315-$1,320.

Gold Hourly: Down-side Targets With Emphasis on Confluence ~$1,278

Gold Prices Cross $1,300 as Bulls Drive post-NFP

Chart prepared by James Stanley

--- Written by James Stanley, Strategist for DailyFX.com

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Silver & Gold Prices at Risk of Reverting Back Lower

Price behavior analysis, short to intermediate-term trade set-ups.

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What’s inside:

  • Silver is trading at confluence of resistance in form of price and 200-day
  • Gold has solid resistance in the area of 1296/1300, a turn lower brings t-line/200-day into view
  • FOMC minutes later today not expected to rock markets, but traders need to be prepared nevertheless

What will drive Precious Metals this quarter? Check out our Q4 Forecast for our outlook.

When we last looked at precious metals the conclusion was lower before higher; and while that was true on an intra-day basis, it wasn’t exactly what we had in mind. It’s been a nice bounce in the sector the past few days with the help of dollar weakness, but are we on the verge of seeing another dive lower towards substantial support levels?

First, we’ll take a look at silver. It’s currently trading around a confluence of resistance via the combination of the 200-day MA and a horizontal price zone (low-17s) dating back to August but more recently late last month. Renewed weakness will bring our attention on the recent swing-low at 16.34, with the area of most significance not arriving until 16.07/13. A breakout above resistance won’t necessarily turn the picture bullish, but would be a start.

Silver: Daily

Silver & Gold Prices at Risk of Reverting Back Lower

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The thought we had last week was for gold to continue to weaken a bit more into a key area of support by way of the 200-day MA, trend-line off the December low, and a minor swing-low created in August. This turned out to not be the case, and so it was the bounce into yesterday led gold up to very near resistance in the 1296/300 vicinity. It’s a fairly substantial area given the double-tops from April/June and the initial failure witnessed around there during August. On a turn lower, we’re still eyeing the December trend-line and 200-day MA, with the possibility (depending on the timing) of Friday’s low also aligning with those two levels.

Gold: Daily

Silver & Gold Prices at Risk of Reverting Back Lower

Volatility heads up: Later today, the FOMC minutes from the September meeting are due out at 18:00 GMT time, and while it isn’t expected to be a big deal we can never dismiss the possibility that a good amount of volatility won’t spawn from it.

---Written by Paul Robinson, Market Analyst

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Dollar Index Continues Choppy Rise with Yellen Guessing On Inflation

Position Trading based on technical set ups, Risk Management & Trader Psychology.

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Talking Points:

  • US Dollar Index Technical Strategy: Anticipating further counter-trend rally above 92.55/82
  • US Dollar Index rejected strongly recently at 94.19; focus will remain there for LT bias
  • Sentiment Highlight: EUR/USD bearish bias from retail gives warning for further DXY weakness

On October 6, DXY capped off a 3.5% rally after being sold for much of 2017, but the price of the US Dollar has struggled to find life since. Over the weekend, current Fed chairwoman, Janet Yellen shared that her “best guess” is that inflation will rebound after unexpected underperformance of US inflation data.

Recently, the US Dollar has traded lower after being rejected at a confluence of resistance near 94.20. The zone around there combined three different technical focuses. First, the mid-August corrective/lower high was at 94.15 followed by a 161.8% extension at 94.20 of the initial move higher when the DXY was seen as too oversold in early September given possible rate hikes at 91.01 to the September 14 high of 92.65. Lastly, a price channel that has framed price action for most of 2017 also predicted price pressure developing above 94.

From here, only a daily close above the 94.20 figure (importance outlined above) opens the door for a challenge of the 2017 downtrend. The first key upside focus would be 95.25 (61.8% retracement of the June-September range.) Alternatively, a reversal back below the 92.82/55 exposes a likely continuation of the downtrend that would first target 91.53 (Sept. 20 low, first corrective higher low.)

Unlock our Q4 forecast to learn what will drive trends for the US Dollar through year-end!

Dollar Index Continues Choppy Rise with Yellen Guessing On Inflation

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

Insight from IG Client Positioning: Pickup in long positioning favors resistance on price advance

The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.

EUR/USD sentiment is analyzed for insight since EUR/USD makes up 57.6% of DXY.

Dollar Index Continues Choppy Rise with Yellen Guessing On Inflation

EURUSD: Retail trader data shows 38.3% of traders are net-long with the ratio of traders short to long at 1.61 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.08123; theprice has moved 9.2% higher since then. The number of traders net-long is 4.5% higher than yesterday and 10.5% lower from last week, while the number of traders net-short is 9.9% higher than yesterday and 10.5% higher 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. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias (emphasis added.)

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

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S&P 500 Technical Analysis: Bullish, but Cautiously So

Price behavior analysis, short to intermediate-term trade set-ups.

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What’s inside:

  • Seasonality turned positive this week, but could see a hiccup develop soon
  • S&P 500 consolidating above recently crossed top-side trend-lines
  • Looking for another thrust higher, but watching for price action we’ve seen before to turn bias

Find out what is expected to drive markets into year-end in the DailyFX Quarterly Forecasts.

Just a few days ago seasonality trends turned from the worst of the year to positive and so this means stocks must continue to propel higher, right? It appears as though Q4 will end better than where it started (Q4 Equity Forecast). Not exactly a bold call given the past eight quarters in a row have been positive. But a hiccup is certainly in the cards and would be fitting to see soon since many have recently been discussing the flip to positive seasonality.

For now, though, let’s look at where the market could be headed in the immediate future and what could signal the beginning of a ‘hiccup’. Last week when we looked at the S&P 500 it had just finished up its eighth day in a row of gains, and this is what we had to say regarding the break above its only visible resistance: “On a pullback/consolidation watch how the market treats the recently broken top-side trend-lines, especially the June line. If it can hold as support then there may be an opportunity for would-be longs to join in on further upward momentum.”

The past week has indeed brought a period of consolidation with the market leaning on the June trend-line, and as long as it holds and we don’t see a break below the bottom of the recent high-level consolidation at 2542, then we look for another thrust higher to unfold. And while this appears likely to be the case we continue to believe any long trades entered at these levels are best sold into renewed strength as risk of a decline increases with each extended move higher.

The market is extended but we aren’t seeing price action which suggests we should turn our focus lower. Not yet. We’ve been warned on several occasions this year that we are on the cusp of entering a period of underperformance and once again we’ll wait for a warning to show again before turning our focus lower. Over the months these warnings showed up in sudden, sharp changes in momentum from one day to the next.

Paul conducts webinars Tuesday-Friday. See the Webinar Calendar for details and a schedule of all upcoming live events.

S&P 500: Daily

S&P 500 Technical Analysis: Bullish, but Cautiously So

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


DAX & CAC Technical Analysis: Consolidation Patterns to Lead Higher

Price behavior analysis, short to intermediate-term trade set-ups.

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What’s inside:

  • DAX consolidation in record territory should lead to test of long-term top-side trend-lines
  • CAC undergoing period of digestion, should resolve towards the May highs or better
  • Bullish in the immediate future, but want to be careful on extension into key levels/lines

Find out what’s driving Global Equity Markets in our Q4 Forecast.

Last week, when discussing the DAX, we were cautiously bullish as the market continues to trade higher but is currently over-extended, and more importantly, facing a test of long-term top-side trend-lines on another push higher from here. The week-long consolidation in record territory suggests we will soon see a resolution higher. Support is close at hand by way of the late-August to current trend-line.

However, from just over 13k to 13.1k lies a pair of long-term trend-lines (2000-2015, 2015-2017). They are indeed long-term in nature, especially the former, but still could be quite relevant, even if just for a short period of time. We’ll be paying close attention to how price action plays out at those lines for clues on what to expect next. A breakout from the recent range may prove to only be temporary before a correction sets in.

DAX: Daily

DAX & CAC Technical Analysis: Consolidation Patterns to Lead Higher

Along with the DAX, the CAC has been undergoing a period of consolidation and is set to resolve to the upside. While the German index has potential cappers not far ahead, the French market has a little room to run before finding resistance by way of the May high at 5442. It’s a significant high not only because a breakout above would mean new multi-year highs, but an important event marked the end of the rally up to that point – the French elections. As long as the current consolidation doesn’t turn into a sharp slide lower, then the targeted objective is the May high at the least.

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CAC: Daily

DAX & CAC Technical Analysis: Consolidation Patterns to Lead Higher

---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.


ASX 200 Technical Analysis: At Last The Super Range Is History

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The ASX 200 has put in a steady run of gains
  • In the process it has managed to close above a notable resistance point
  • Could the year’s highs come back into range?

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Last week could have been quietly crucial for the ASX 200.

Without fanfare the Australian equity benchmark managed a Friday close above what we I have taken to calling its Super Range. That’s the narrow, 150-point trading band which had contained all the action on a daily close basis since May 17. Hard to believe? You can see it clearly in the chart below.

ASX 200 Technical Analysis: At Last The Super Range Is History

And if we zoom in we can see that the bulls have managed to engineer the first decisive range break we have seen.

ASX 200 Technical Analysis: At Last The Super Range Is History

Can they make it stick? Well, as you might expect after an impressive run of nine straight higher closes, they are looking a little exhausted, at least for the time being. The ASX’s Relative Strength Index has nudged into the overbought danger zone above the 70 level (it’s now around 74). This suggests that the benchmark could probably do with a period of consolidation and it will be fascinating to see where the lower boundary of this process proves to be.

At present the index can probably look to support at the Super Range’s old maximum altitude -June 14’s intraday top of 5842.3. Below that there’s its highest daily close, the same day’s 5807.7. However, while those points are clearly interesting ones for Super Range followers, they are a little distant now, historically speaking. So retracements may instead come back as far as more recent props. That could mean that more recent highs are the ones to conjure with, such as those of mid-August in the 5785 area.

ASX 200 Technical Analysis: At Last The Super Range Is History

We can’t know yet of course whether the index will have the legs to push on back to its 2017 peak just under 6,000. But an upside Super Range break was a necessary first step- a first step which has now been taken.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


Nikkei 225 Technical Analysis: Time to Pause Before Pushing On?

Financial markets, economics, journalism and fundamental analysis.

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Talking Points:

  • The Japanese stock benchmark is sitting close to 21-year highs
  • However, it does look a bit overbought so consolidation is probably in order
  • It’s probably also worth keeping an eye on the Japanese Yen

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The Nikkei 225 is scaling peaks not seen for nearly 21 years.

Borne aloft by improved corporate earnings cheer and optimism over broader Japanese economic strength the Tokyo benchmark closed Wednesday at 20,881.27- it highest close since December,1996. A weaker Japanese Yen has probably also played a big part in the index’s strength, as it’s sight which usually cheers investors in Tokyo’s plentiful export giants.

Unlike its US counterparts, however, which seem to make fresh all-time highs almost daily, the Nikkei remains some way short of its best ever closing high- 1989’s 39,915.87. Still, its performance has been impressive and certainly looks backed up by the fundamentals, but what does the technical picture look like?

Well, the index is sitting very comfortably towards the centre of an uptrend channel drawn from September 8’s lows. For as long as it remains there the bulls should be emboldened to try for the psychologically important 21,000 level at least and, maybe, the uplands beyond.

Nikkei 225 Technical Analysis: Time to Pause Before Pushing On?

That said we have already seen a very impressive upward run, with green candles clearly dominating the daily chart for nearly 30 sessions. It should probably come as no surprise then that the index should look a little overbought. And indeed it does. The Relative Strength Index for the daily chart currently tips the scales at a weighty 76. That’s well over the 70 level which usually sounds warning bells and suggests that the buyers have become a little too exuberant, at least in the short term.

Still, for the moment any weakness will probably be consolidative as bulls attempt to build a base from which to strike out higher. The chart’s moving averages still look reasonably bullish despite recent action. The 20-day average crossed above the 50- and 100-day versions in late September and now the 50-day looks set to cross the 100-day too. This would be another traditionally bullish sign and is worth keeping an eye on.

Nikkei 225 Technical Analysis: Time to Pause Before Pushing On?

It’s probably also worth watching the USD/JPY chart too. The greenback has scored impressive gains since September after spending much of the year on the ropes. But it has also spent the past two weeks doing very little and, if the bulls are going to take it higher, it’s not clear what exactly might be stopping them.

It’s not a dead cert that Nikkei strength requires Yen weakness, but it is very often the case.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX


FTSE in a Fist Fight Around Record Highs

Price behavior analysis, short to intermediate-term trade set-ups.

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What’s inside:

  • FTSE closes at new record highs, but yet to break intra-day record high
  • Market falling back towards big trend-line off the Feb ’16 low
  • If support holds, look for the 7599 intra-day high to be challenged soon

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Last week on Thursday the FTSE followed in the footsteps of a couple of other major global equity indices (S&P 500, DAX) and closed at a new all-time high. Time to be excited, right? Despite the close in record territory there are still intra-day levels standing in the way of the index trading freely to new highs, and even then, buying into new record highs hasn’t proven to be much of a fruitful venture in the past. New highs, trade a little higher, then dip has been the pattern for quite some time.

It was only a single day on this trip into record territory before finding sellers, but the decline unfolding in slow fashion so far suggests there aren’t a great deal of sellers in the vicinity. A spot we’re watching as support is soon to arrive with a little more weakness; it comes in by way of the February 2016 trend-line which the UK index regained claim on back on the 3rd of the month. It's been an influential trend-line since the latter part of August, and why not? The two connecting points – major global equity market low in February 2016 & ‘Brexit’ low – are important ones. The trend-line held successfully in August before busting, can it provide support this time around?

If the noted trend-line can hold then look for the footsie to make an attempt on busting through the intra-day record high at 7599. If the trend-line doesn’t hold, then the first level of support arrives around 7435/60, the top of a range from August-September. Holding this after breaching the Feb ’16 trend-line would be important. For now, that isn’t under threat so we’ll keep an eye on how price reacts to the two-significant top and bottom-side thresholds in front of us.

Paul conducts webinars Tuesday-Friday. See the Webinar Calendar for details, and the full line-up of upcoming live events.

FTSE: Daily

FTSE in a Fist Fight Around Record Highs

---Written by Paul Robinson, Market Analyst

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