The Market
EUR/USD rebounds from 1.1150 and breaks above 1.1215
•EUR/USD traded slightly lower on Monday, but hit support at 1.1150 (S2) and rebounded to break above the resistance (now turned into support) of 1.1215 (S1). Although I would expect the positive move to continue and perhaps challenge the 1.1300 (R1) barrier, I would maintain my flat stance as far as the short-term picture is concerned. A clear break above 1.1300 (R1) is needed to turn the near-term outlook positive, in my view. Our momentum studies show that the RSI emerged above its 50 line, while the MACD, already above its trigger line, has just turned positive. These signs support the idea that the pair is likely to continue trading higher for a while, at least for a test of the 1.1300 (R1) line. In the bigger picture, as long as EUR/USD is trading between the 1.0800 key support and the psychological zone of 1.1500, I would maintain a flat stance. I would like to see another move above 1.1500 before assuming that the overall outlook is back to positive. On the downside, a break below the 1.0800 hurdle is the move that could shift the picture negative.
• Support: 1.1215 (S1), 1.1150 (S2), 1.1100 (S3)
• Resistance: 1.1300 (R1), 1.1340 (R2), 1.1390 (R3)
USD/JPY trades sideways
•USD/JPY traded lower yesterday but remained within the sideways range it’s been trading in since the 8th of September, between the support of 119.20 (S1) and the resistance of 121.25 (R2). As a result, I would consider the short-term outlook to be neutral for now. I believe that a break below 119.20 (S1) is needed to turn the near-term picture negative. Something like that could initially aim for the next support at 118.60 (S2). Both our short-term momentum indicators oscillate around their equilibrium lines, confirming the sideways movement of the rate. As for the broader trend, the plunge on the 24th of August signaled the completion of a possible double top formation, which turned the medium-term outlook somewhat negative. As a result I would treat the recovery from the 116.00 zone as a corrective phase and I believe that it is more likely for the pair to exit its short-term sideways range to the downside.
• Support: 119.20 (S1), 118.60 (S2), 117.75 (S3)
• Resistance: 120.55 (R1), 121.25 (R2), 121.75 (R3)
EUR/GBP breaks above 0.7400
•EUR/GBP surged on Monday, breaking above the key resistance (now turned into support) area of 0.7400 (S1). The price structure on the 4-hour chart suggests a short-term uptrend and therefore, I would expect the positive wave to continue and perhaps challenge the psychological zone of 0.7500 (R1). Our short-term oscillators reveal strong upside speed and support the notion. The RSI turned up and now appears ready to move above its 70 line, while the MACD, already positive, stands above its trigger line and points north. As for the broader trend, the move above 0.7170 on the 21st of August has turned the medium-term outlook positive. What is more, the break above 0.7400 confirmed a forthcoming higher high on the daily chart and reinforced that medium-term uptrend in my view.
• Support: 0.7400 (S1), 0.7335 (S2), 0.7300 (S3)
• Resistance: 0.7500 (R1), 0.7600 (R2), 0.7700 (R3)
Gold breaks below the lower bound of the channel
•Gold plunged on Monday, falling below the 1135 (R1) line and the lower bound of the upside channel that had been containing the price action since the 15th of September. This has turned the short-term outlook cautiously negative in my view. A clear break below 1128 (S1) is likely to confirm the case and perhaps aim for the next support at 1121 (S2). Our short-term oscillators detect negative momentum and support somewhat the notion. The RSI stands below its 50 line, while the MACD, already below its trigger line, has just obtained a negative sign. As for the bigger picture, with no clear trending structure on the daily chart, I would hold my neutral stance. I believe that a close above 1170 is needed to signal a newborn medium-term uptrend.
• Support: 1128 (S1), 1121 (S2), 1115 (S3)
• Resistance: 1135 (R1), 1142 (R2), 1148 (R3)
DAX futures slide after hitting resistance at 9750
•DAX futures traded lower on Monday after hitting resistance at 9750 (R1). The price structure still suggests a short-term downtrend in my view and therefore I would expect the negative move to continue and perhaps challenge the 9315 (S2) support, defined by the low of the 24th of August. Our momentum indicators detect downside momentum and amplify the case for further bearish extensions. The RSI edged lower after it hit resistance slightly below its 50 line, while the MACD, already negative, has topped and could fall below its trigger line soon. On the daily chart, the break below 10670 on the 20th of August has shifted the medium-term outlook to the downside, in my view. Therefore, I would treat the 24th of August – 9th of September recovery as a corrective phase and I would expect the index to extend its declines.
• Support: 9315 (S1), 9130 (S2), 9000 (S3)
• Resistance: 9750 (R1) 10025 (R2), 10170 (R3)
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