Two weeks off, vacation

I would like to let you all know that I will be taking a two week recess and will be back with the blogs on November 7^th. Thank you all.

Is the Dollar ready for a correction?

The Dollar index has been rallying for the last three weeks as shown on the weekly chart. The Dollar has been supported by the probability of seeing an interest rate hike by December. The strong rally on the Dollar has taken it to over-bought territory and it is possible to see a bearish bounce from the current level. The 95.59 zone has acted as resistance in the past and it could act once again as resistance. But a breakout above the 98.59 level could take the index to the 99.88 level or the high above the 100.62 level. To the downside, the first support of the index is the 98.00 level, from there the next support is the 55 day exponential moving average, around the 95.85 level. The last supports levels are the 94.00, the 93.00 and the 91.88 level.

The Dollar index stays bullish

On the daily chart of the Dollar index we can see that the instrument had a good rally from the 95.70 zone to the 98.00 zone. During the past few days, the index was consolidating around the 98.00 zone, but today it breaks to the upside and it could continue going higher, especially when we see a “golden cross” on the moving averages. The golden cross is when the 55 day exponential moving average, purple line, crosses above the 200 day exponential moving average, blue line. The golden cross has bullish implications; therefore, the index may try to reach the 98.59 level, which could act as resistance. The index is clearly over-extended to the upside and it could try to retrace to the downside. If the index retraces to the downside, then its next support could be the 97.00 level.

Possible “hammer” on the USD/CAD

The “hammer” formation is a bullish reversal pattern where the candle has a long lower shadow with a small real body on the upper zone of the candle. The long lower shadow is the key on this pattern, because it tells us that at some point the sellers where having control of the instrument and brought the price down. However, the buyers took control of the instrument and brought the price back up, leaving behind the long lower shadow. On the daily chart of the USD/CAD we can see that Wednesday’s candle has the hammer formation. If this Thursday’s candle closes with a bullish candle, then the hammer formation will be confirmed and the price may change in the direction to the upside. If the price continues going higher, then the next resistance could be the 1.3200 level, followed by the 1.3300 level. To the downside, below the 200 day EMA, blue line, its next supports could be the 1.3047 level or the 1.3000 level.

Well defined range on gold

Gold has formed a very good horizontal channel as shown on the daily chart, with the 1250.00 level as support and the 1269 level as resistance. Range trading could be tricky since the price could break out in any direction in any moment. That is why the most conservative option is to wait for the breakout and then the pullback to enter in the direction of the original breakout. Below the 1250 level, its next support is still the 1200.00 level. Above the 1269 level where we can see the 200 day exponential moving average, its next resistance could be the 1300.00 level, especially when the 55 day EMA is right at that level now. The retracement on the Dollar has a lot to do with the rally on gold, but we need a really good reason for the precious metal to break above the 1269 level.

The USD/CAD visits the 1.3100 level

On the daily chart of the USD/CAD we can see that the pair has dropped once again to the 1.3100 zone. Just below the 1.3100 level we can also see the 200 day exponential moving average, blue line, which may contribute another support on that zone. The pair may try to bounce to the upside and if so, then the 1.3200 level may act as its next resistance. But a breakdown of the 200 EMA may accelerate the bearish momentum and the price may even visit the 1.3000 level. All depends if oil keeps rallying, which at the moment is just consolidating between the 50 and 51.60 levels.

Possible pullback on the Kiwi

The New Zealand Dollar versus the US Dollar is trying to bounce to the upside from the 200 day exponential moving average as shown on the daily chart. The 200 EMA usually acts as a support or resistance zone, therefore we could see a bullish pullback on the pair, especially when the instrument is clearly over-extended to the downside. In case the price breaks to the downside, its next support could be the 0.7000 level. To the upside, we can see that there are no clear resistances, but any of the highs of the candles could act as resistance. Although, the most important resistance could be the 200 week exponential moving average, around the 0.7382 level.

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Euro, three days in free fall

On the daily chart of the EUR/USD we can see that the price has been dropping from the 1.1200 level during the last three days and it is reaching the 1.1000 level, completing a 200 pip drop. The price may try to stall or bounce back to the upside from the 1.1000 level, but if it does, then the 1.1100 level could act as resistance. Above the 1.1100 level, the price may be returning to the congestion area around the 1.1200 level. We must keep in mind that the bearish trend is still in place and the price may break below the 1.1000 level. In case the price breaks below the 1.1000 level, then it may try to go and visit the 1.0952 level.

Key point on oil

WTI Oil has been rising steadily and on the daily chart we can see that it has made a high around the 51.60 level from where it bounces to the downside. Today the price of oil reaches the 50.00 level, which could act as support due to the fact that it has acted as resistance in the past. The bullish trend is still in place, especially when the 55 day EMA, purple line is pointing up and it is separating from the 200 day EMA, blue line. The 51.60 could still act as resistance if the price keeps rising, but if oil breaks below the 50.00 level, then it may try to reach the 48.00 level. The 55 day EMA may also act as support if the price drops to that zone.

Explosive rally on oil

WTI oil has broken once again above the 50.00 level, but with a lot more strength, after Russia said that it agrees with OPEC’s plan to freeze oil production. The news has caused oil to rally to the 51.60 zone as shown on the daily chart. The price of oil may try to stall at the 51.60 zone, but the bullish momentum is still in place. Above the 51.60 level, it next resistance could be the 53.00 level. To the downside, in case the price retraces, the 50.00 level could act as its first support, but it may try to break it to reach the 48.00 level, which could act as a better support. The commodity is over-extended to the upside and that is why it is vulnerable to a bearish correction.

Gold: Breakout-pullback pattern

The breakout and pullback pattern is when the price of an asset breaks a support or resistance and pulls back to it, but then it continues in the direction of the original breakout. The pattern gives the opportunity for new traders to come into the market. On the daily chart of gold we can see that the price has broken below the 200 day EMA, blue line, and now it is pulling back to the 200 EMA. If the price reaches the 200 EMA, then it may bounce to the downside and even try to break below the 1250 level. Below the 1250 level, its next support could be the 1200 level. If for any reason the price breaks above the 200 EMA, then the 1300 level could act as its next resistance.

Gold still bearish

Gold continues dropping and it has reached the 1250 level as shown on the daily chart, where it may try to bounce to the upside. If the price bounces to the upside and reaches the 200 day exponential moving average, then a breakout and pullback may be completed and a short entry may be possible. If the price breaks above the 200 day EMA, then the 1300 level may still act as a resistance. On the other hand, if the Dollar continues rising, especially if the NFP numbers come out better than expected, then the precious metal may continue dropping and break below the 1250 level. The next support level below the 1250 level is the 1200 level.

Corn stalls its rally

Corn on the daily chart has kept a good rally and it is showing a trend change, but after it broke above the 340.00 level and the 55 day exponential moving average it stalls at the 346.00 zone during the last few days. The bullish trend is still in place and the price of corn may try to continue going higher. If it continues going higher, then the 200 day exponential moving average around the 358.57 level could act as its first resistance. Above the 200 day EMA, its next resistance is at the 383.88 level. To the downside, the first support is the 340.00 level, but below that level, the 325.00 level could also act as support. The low at the 312.17 level is its most relevant support so far on the daily chart.

The rally of the USD/JPY

The USD/JPY rallies for today from the 102 zone to the 103 level. Currently, the 103.00 level is acting as resistance and the price may try to bounce to the downside. But if risk appetite keeps rising in the markets, then the pair may break above the 103.00 level and try to visit the 104.00 zone, which has acted as resistance in the past. If the pair bounces to the downside, then the 102.00 level along with the 55 day EMA, purple line, could act as support and the price would stay inside the descending triangle pattern, where the 100.00 zone is the most important support.

Gold drops

On the daily chart of gold we can see that today it suffered one of its most profound drop in recent time. Gold actually dropped 3% after the better than expected fundamentals from the US made the Dollar rally along with risk appetite in the markets. Since gold and the Dollar have a negative correlation, when the Dollar rises, gold drops. On the chart we can also see that the price has dropped to the 200 day EMA around the 1269 level, which coincides with the 200 week EMA, no wonder it stalls there momentarily. From this point the price may bounce to the upside, but the 1300 level could act as resistance.