The US dollar steadies over lower-than-expected initial jobless claims.
Sentiment remains upbeat, however, the pair is struggling to climb past the psychological level of 115.00, probably due to overextension. The RSI’s double top in the overbought area and bearish divergence suggests that the rally could be losing steam.
A breach below 113.90 would prompt weaker hands to exit, leading to a pullback towards 113.00. A rebound past the said resistance would send the price to March 2017’s high of 115.40.
XAGUSD to test critical ceiling
Silver stalls as the greenback reclaims some lost ground. The break above the round number of 24.00 indicates strong commitment from the buy-side.
The bulls are looking at the major resistance at 24.80 from the daily timeframe, as a breakout would end a five-month-long correction and pave the way for a bullish reversal.
However, an overbought RSI coupled with a bearish divergence suggests possible exhaustion in the run-up. 23.60 would be the first level to watch for if the price pulls lower in search of support.
SPX 500 tests all-time high
The S&P 500 flies high supported by better-than-expected third-quarter earnings. The index has reached the previous all-time high at 4550.
A breakout may trigger a runaway rally. Nonetheless, a repeatedly overbought RSI may cause a limited pullback as buyers take profit.
A drop below the immediate support at 4515 would pull the trigger. 4445 would be next as it coincides with the 38.2% Fibonacci retracement level of the October rally. The bulls are likely to buy the dips though after sentiment turns optimistic.
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EUR/GBP extends gains as BoE could move to hike sooner. Oil prices keep on rising beyond $80.
EUR/GBP extends gains as BoE could move to hike sooner
EURGBP is pushing lower at the start of the new week, extending losses from the previous week.
The move lower comes after BoE policymaker Michael Saunders warned that households should brace themselves for a significantly earlier interest rate rise as inflationary pressure mount.
Rising energy prices and labour shortages mean that consumer inflation is expected to rise over 4% by the end of the year and remain elevated for longer than initially expected.
Meanwhile the ECB last week sent the Euro southwards after the minutes to the latest ECB meeting revealed that the central bank is looking into another bond purchasing programme for when the PEPP expires.
The central bank divergence is boosting GBP whilst dragging on EUR.
Where next for EUR/GBP?
EURGBP trades at an intraday low below 0.86. The pairs trades below its descending trendline dating back to late September and below its 20 & 50 sma on the4 hour chart.
The RSI is supportive of further downside whilst it remains out of oversold territory.
Immediate support can be seen at 0.8475, last week’s low. A break below here could open the door 0.8450 August’s low and year to date low.
On the upside, resistance can be seen at 0.85 the confluence of the 20 sma and the falling trendline. A move above here could see 0.8525 horizontal resistance come into focus ahead of the 50 sma at 0.8550
Oil prices keep on rising beyond $80
Crude oil jumped again as the new week kicks off, extending solid gains from last week and trading at 7-year highs as the energy crisis tightens its grip.
Gas and coal prices have been surging as economies recover from the pandemic and economic activity picks up. The rise in the price of these commodities makes oil comparatively cheaper and more attractive.
There are reports of blackouts in some stats in India whilst China has ordered the ramping up of coal production as prices rally.
Meanwhile OPEC voted to stick to the output increase agreed in July.
US added five new oil wells last week.
Where next for oil prices?
WTI oil price is extending its rebound from $61.79 on August 20 trading within the ascending channel from this date.
The RSI has tipped into overbought territory so there could be a period of consolidation or even a slight ease lower on the cards before an uptrend is resumed.
The price has pushed above $80 the round number and is heading for resistance at 81.98 the November 14 high and the upper band of the rising channel.
Support can be seen at 78.30/40 the October 4 high and October 8 low. Beyond here watch for 76.50 the September high and 74.80 October 7 low.
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Monday can be bullish for GBP pairs fundamentally amid the news of receiving the first COVID vaccination by 22.2 million people of Britain. This Monday, Bank of England Governor Andrew Bailed is due to speak about the economic outlook and may provide additional support to the local currency with an optimistic stance.
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Bulls are waiting for the UK chancellor to unveil the key budget. With the predictions, the pair seems to break the 1.4000 level easily. Another reason is a fall in US treasury yields which can make gbpusd up.
The Chancellor of the Exchequer will unveil the latest UK Budget on Wednesday at 12:30 GMT. It will likely include another massive round of spending to safeguard jobs and boost the recovery. Rumors suggest taxes on corporations might be raised as well to repair the hole in public finances, but it’s probably too early for that. As for sterling, with the UK reaping the benefits of early vaccinations, the overall picture seems positive, especially against the growth-starved euro.
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Sterling climbed to fresh multi-year highs against the U.S. dollar and closed in on fresh one-year highs versus the euro. Investors cheered Prime Minister Boris Johnson’s plan to ease restrictions across England. With more than a quarter of its population receiving at least one coronavirus vaccine dose, new cases in the UK have fallen from a high of 68,000 in January to 9,800 on Sunday. Schools will reopen on March 8 followed by outdoor gatherings March 29. There will be a five-week gap between each stage, which means restaurants, retail shops and pubs may not open until spring. UK labor market numbers are scheduled for release tomorrow and if claimant count increases, like the PMIs suggest, we could finally see a pullback in sterling.
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#EURGBP broke to fresh lows since May last year below 0.8800 yesterday, After having flirted with a break of key support around 0.8866-67 at the start of the year, sellers are gathering more momentum in shoving the pair lower this week
EURUSD Sustains Breakdown from an Inverted Cup and Handle Pattern, Calls for Sell
Trade Information:
1st Take Profit: 1.9200 2nd Take Profit: 1.1755 Stop Loss: 1.2188
EURUSD had been forming an inverted Cup and Handle pattern, since 9th December, 2020. Recently, the currency pair has managed to sustain a breakdown from the neckline of the pattern suggesting a downward movement in prices. Further, dots of parabolic SAR indicator are trading above the 4-hour closing suggesting a negative revision in prices. Thus, investors can take short position at current trading level and set an initial target profit at 1.9200 level, which is equal to height of handle. In case the currency pair moves below the first target profit then investors can aim next profit level at 1.1755. The stop loss in this case is kept at high made by handle at 1.2188level.
USDJPY Sustains Breakout from the Descending Broadening Wedge Pattern, Buy Opportunity
Trading Information
Target Profit: 107.299 Stop Loss: 103.523
USDJPY had been forming lower highs and lower lows in the Descending Broadening Wedge pattern since 21st June 2021. The currency pair had breached the upper trendline and have managed to sustain the breakout in the weekly time frame. Further, the Parabolic SAR indicator suggests an upward price action with the formation of dots below the weekly price closing. Thereby, the traders can take a long position with a target price of 107.299 level, equal to the depth of the pattern. Concurrently, the stop loss can be pegged at 103.523 level. This trade offers a good risk-reward setup.
EURGBP Rebounds from the Lower Trendline of the Right-Angled Descending Broadening Wedge Pattern, Buy Signal
Trade Information
Target Profit: 0.8915 Stop Loss: 0.8793
EURGBP has been forming lower lows with upside capped near 0.8915 level as it trades within the Right-Angled Descending Broadening Wedge Pattern since mid January. Recently, the pair rebounded after taking support from the lower trendline of the pattern in a daily timeframe. In addition to this, bullishness in the pair is underpinned by the bullish crossover in the Relative Vigor Index indicator where the RVI (green line) has crossed above the signal (red line). Thus, keeping the above technical evidence in view, traders must grab the buy opportunity in the pair, with target profit placed on the upper trendline of the pattern at 0.8915 level. Simultaneously, the stop loss can be set at 0.8793 level.
AUDCAD Rebounds from the Lower Trendline of the Descending Channel Pattern, Calls for Buy
Trade information
Take profit: 0.980 Stop-loss : 0.970
AUDCAD has been trading within the Descending Channel pattern since 28th January. Recently, the prices rebounded after taking support from the lower trendline of the pattern in a one-hour timeframe. In addition to this, the prices are making lower lows from the past few sessions. On the contrary, the RSI indicator is making high lows, signaling bullish divergence that also suggests a reversal might be in place. Therefore, prices are likely to extend their upward journey in the coming hours and traders can grab the buy opportunity with the target profit kept at 0.980 level. Simultaneously, the stop loss for the trade is kept at 0.970 level.
USDCAD Rebounds from the Lower Trendline of the Symmetrical Triangle Pattern, Buy Opportunity
Trade Information
Target Profit: 1.28493 Stop Loss: 1.27616
USDCAD has been trading within the Symmetrical Triangle pattern since 27th January, 2020. The prices have rebounded from the lower trendline of the pattern in an hourly time frame. In addition to this, upside movement in the pair is underpinned by the Bollinger Bands indicator, as the prices bounced after taking support from the lower band. Therefore, the pair is likely to extend its upward journey in the coming sessions and traders can grab the buy opportunity with the target profit kept at 1.28493 level, at the upper trendline of the pattern. Simultaneously, the stop loss for the trade is kept at 1.27616 level.
AUDUSD Reverts from the Upper Trendline of the Ascending Broadening Wedge Pattern, Sell Opportunity
Trade Information
Target Profit: 0.7198 Stop Loss: 0.7834
AUDUSD has been trading within the Ascending Broadening Wedge Pattern since the beginning of May 2020. The prices have witnessed a pullback from the upper trendline of the pattern in a weekly time frame. In addition to this, downside movement in the pair is underpinned by the bearish crossover formed in the RVI indicator, as RVI line (green line) has moved below the signal line (red line). Therefore, the pair is likely to extend its downward journey in the coming sessions and traders can grab the sell opportunity with the target profit kept at 0.7198 level. Simultaneously, the stop loss for the trade is kept at 0.7834 level.
EURAUD Reverts from the Upper Trendline of the Descending Broadening Wedge Pattern, Sell Opportunity
Trade Information
Target Profit : 1.5380 Stop Loss: 1.5930
EURAUD has been trading within the Descending Broadening Wedge pattern since the end of November 2020. The prices have reverted after facing rejection from the upper trendline of the pattern in a daily time frame. In addition to this, downside movement in the pair is underpinned by the bearish crossover formed in the RVI indicator, as RVI line (green line) has moved below the signal line (red line). Therefore, the pair is likely to extend its downward journey in the coming sessions and traders can grab the sell opportunity with the target profit kept at 1.5380 level. Simultaneously, the stop loss for the trade is kept at 1.5930 level.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 