17 October, 2016
The Euro ended last week in the negative territory after prices showed a strong bearish engulfing candle in the weekly chart. Looking at the week ahead, the technical picture remain strongly bearish and a continuation lower towards 1.0910 major support is likely as long as the pair continue to trade below 1.1100 handle. In the short-term, the next level of interest stands at 1.1060 and only a break above this peak should weaken the negative outlook.
As of today, 1.1010/20 represent the hourly resistance zone for the Euro while a breakdown below 1.0970/60 support levels can trigger another sell-off in the coming hours.
Cable remain weak in both the med-term and the short-term charts, therefore, any recovery may be short-lived below 1.2270 peak.
In the coming hours, the focus should be on 1.2130 support as a daily close below it, should confirm that sellers have overtook the control of this pair again, and prices can be ready to begin a new wave to the downside.
From an intraday perspective, 1.2198 is considered as a strong barrier and at least a 4-hour close above it is needed in order to begin talking about a potential bullish reversal in the short-term.
In extension, a breakdown below 1.2130 support is likely to clear the path for 1.2090/80 area.
The Australian Dollar managed to bounce strongly during last Friday as bulls succeeded to preserve the 0.7500 psychological support.
In the meantime, the recent recovery stalled around 0.7645 hourly resistance, which keep the short-term view neutral for the time being. Meanwhile, the daily technical picture is giving more support to the positive side as the pair continue to respect the higher low structure that began from 0.7140 monthly support.
In addition, traders should be aware that volatility might increase overnight ahead the RBA meeting minutes.
Now let us review the possible scenarios for the following hours:
A move back towards 0.7575/60 support area can be the beginning of a new impulsive wave to the upside that can reach 0.7690 peak later.
In the opposite, a 4-hour close above 0.7645 resistance can be a very strong positive signal and prices can continue trading higher towards 0.7690 peak without any correction from the current levels.
The invalidation of this scenario will come with a clear breakdown below 0.7530 daily support.
After several attempts to overtake 1.3300 psychological barrier, the pair fell sharply as bearish momentum increased significantly during yesterday.
In addition, the pair break below 1.3218 hourly support registered following the FOMC meeting minutes of last week, reinforcing the bearish outlook in the short-term. In the meantime, prices are testing a major support located at 1.3100 and a break below it should lead to further decline in the direction of 1.3070 level in the coming days.
Looking at the short-term price action, 1.3185/1.3205 zone has turned resistance and we should see strong sellers around it.
To conclude, momentum indicators turned negative in this pair, which keep the outlook bearish for the week ahead with potential targets around 1.3070 followed by 1.3000 weekly support.
In the opposite, only a daily close above 1.3220 level will cancel this bearish scenario.
The pair remain bullish for the time being as long as prices keep trading above 102.80 support.
However, it is important to note that the daily trend still negative and traders have to wait for a daily close above 104.50/60 zone to confirm an effective bullish reversal in the daily chart.
As we can see, sellers continue to cap the current rally as bullish momentum faded. Therefore, another wave to the downside remain possible in the coming hours especially if prices manage to break below 103.78 support.
If the current drop happen, then we will look for support around 103.60/30 while a daily close below this zone should warn about a topping formation at 104.50 daily resistance, which can lead to a re-test of 102.80 support again.
In the flipside, a daily close above 104.50 resistance should trigger a big rally in the direction of 105.60 level.
Gold prices stabilized in the recent days after the big sell-off seen in the previous two weeks, meanwhile, as far as the Dollar index remain strong and speculation for U.S rate hike by the end of this year still high, the yellow metal is likely to remain under pressure.
Technically, the fight is taking place between 1262 barrier in the upside and 1246/41 zone in the downside, which keep the short-term view neutral for the time being.
From a wider angle, the daily trend still strongly bearish and as far as 1277 high is intact a continuation lower in the direction of $1235 seems ideal to end a bearish cycle from 1317 peak.
In the flipside a daily close above 1277 should warn about a potential reversal in gold prices, otherwise, downside risks should persist.
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