2018-06-03: Weekly update on OMXS30, SP500 and Euro/Dollar

The past week saw a couple of throws due to worries over Italian politics. Sweden’s OMXS30 continued to trend downwards while the US, like too often, painted a more positive picture. Meanwhile the Eurodollar, after falling sharply, has encountered some initial resistance in level with the midterm uptrend. Can we expect a turn?

OMXS30

OMXS30-20180603

What has happened?

After breaking above the negative channel, the OMXS30 fell heavily for about one and a half week. On Friday we ended on a strong note. Does this indicate a change of trend? On the one hand, the main bet was on a bear-turn around the roof of the sloping down-trend (the dotted lines). This reinforces the picture that we are heading down.

What to expect?

After a strong bullish engulfing pattern this Friday, the question is whether this is something to act on. Speaking in favor of a continuation upwards, (1) the turn-around occurred in an area where the buyers previously have topped the sellers; (2) this level also corresponds with the lower fib-level and (3, this also happens to mark the mid-level of the rise since the marking out of the double bottom (the marubozu level). On the other hand, the bearish turn at the roof of the negative channel strengthens the view that the main trend is negative. If so, attempts to push higher should be seen merely as minor bumps on or journey south.

Speculative positions could be taken, with an aim for the MA-200 and, possibly higher. Should we, on the other hand, break below Fridays low, then we are probably heading lower. However, time looks ripe for an upswing. In any case, take caution, for until any clear direction is staked out price action is bound to remain bumpy.

Long-term view: Negative
Mid-term view: Neutral
Short-term view: Negative

SP500

S500-20180604

What has happened?

The SP500 has been trading in a rather tight range last week, with only minor swings. In my opinion, this last week has seen several failed attempts to pull price lower, with each attempt been followed by an even stronger move upwards. This indicates strength.

What to expect?

We are in a positive trend and, at the moment, all moving averages are underneath the current price. After two touches on the MA200, and the break through the negative triangle a couple of weeks ago, time appears ripe for higher territory. In the short term we encounter some resistance around the last close, but above that, in the longer run, the road is open up until 2790. Should we, on the other hand, break down, price is bound to remain choppy and, the index, difficult to trade.

Long-term view: Positive
Mid-term view: Positive
Short-term view: Neutral

Eurodollar

EURUSD-20180604

What has happened?

As most probably know, the Eurodollar currency pair has traded significantly lower since breaking below the trading range in late April. All support levels have been sliced through with little apparent difficulty. A half-hearted attempt at 1.1875 ended quickly and presented a bearish continuation signal in MACD. Mid last week the fall stopped and we appear, in the short run, to have bottomed out.

What to expect?

The long-awaited resistance appeared just at the level of the long-term uptrend. As of yet, however, we have but one positive candle to go after. This is not enough to construct an argument for a valid bet on the bulls – but things are starting to brighten. Expect price action to remain choppy around these levels but, after the price has stabilized, I see breaks to the upside as openings to bet for a continuation of the long uptrend.

Long-term view: Positive
Mid-term view: Negative
Short-term view: Negative

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