The GBP/JPY is trapped between EMAs

The moving averages could act as levels of resistance or support and in certain occasions the price of an instrument may get trapped between two moving averages, bouncing from one to the other. On the daily chart of the GBP/JPY we can see that the price of the pair has been stuck between the 200 day EMA (blue line) and the 55 day EMA (purple line). The range between the two EMAs goes from the 141.74 to the 143.00. When that ranges is wide enough, one could trade inside it, buying at the support and selling at the resistance. However, if the range is too tight or if one doesn´t want to take any chances by getting caught on the wrong side of the market in case of a breakout, we can wait for a breakout before taking a position. If the price breaks to the upside, then the next resistance level above the 143.00 zone is the 145.00 level. Below the 200 day EMA or the 141.74 level, the next support levels could be the 140.00 level followed by the 139.00 level.

The NZD/USD is still overbought

The stochastics indicator is usually used as an overbought or oversold indicator. However, it has its weak spots like when the price of the underlying asset stays in a sustainable trend, while the indicator is trapped between the 100% and the 0%. On the daily chart of the NZD/USD we can see just that; while the price of the pair has kept a very good bullish trend, the indicator has gone above the 80% line, but it is not able to keep rising above the 100%, especially if the price of the NZD/USD breaks above the 0.7100 level. In case of a breakout, the next resistance on the pair is at the 0.7200 level. In case of a bearish bounce from the 0.7100 zone, its closest support is at the 200 day EMA (blue line) at the 0.7034 level. In theory, the price of the asset may continue rising indefinitely, but not the stochastics indicator and that is the weak spot that the indicator has. The stochastic indicator works well in a trending market, but it stops working when the trend is kept for a long time. Below the 200 day EMA, the NZD/USD has practically the road clear to drop all the way to the 0.6900 zone.

The GBP/JPY bounces from the 143.00 level

On the daily chart of the GBP/JPY we can see that the pair has been retracing downwards in an orderly fashion since it started dropping from the 148.09 zone. Every time the pair makes a new low, it consolidates for a while to then accelerate its bearish momentum and make a lower low. When the pair broke below the 143.00 level and below the 55 day EMA (purple line), it consolidated during a day to pull back to the 143.00 level and its 55 day EMA to bounce to the downside from there. If the price continues dropping, then it may reach the 200 day EMA (blue line) at the 141.74 level where it may stall. But if the GBP/JPY manages to break below the 200 day EMA, then its closest support is at the 140.00 level followed by the 139.00 level. Below the 139.00 level, the pair practically has the road clear to visit the low at the 135.58 zone from where it started rising. Above the 143.00 level, its most important resistance is at the 145.00 level followed by the 146.00 level and the 147.00 level, but its most relevant resistance is at the high at the 148.09 zone from where it started falling.

The GBP/USD retraces to the 55 day EMA

The GBP/USD plummets during today’s session, pressured to the downside by strength in the US Dollar and the possibility that the upcoming UK general elections could turn very tight for the Conservative Party of the Prime Minister, Theresa May. The GP/USD drops to the 1.2800 zone where we can find the 55 day exponential moving average (purple line) or the 55 day EMA. The confluence of the 1.2800 round number level and the moving average could make this zone a very good support for the GBP/USD. Therefore, it is possible to see a bullish bounce from this area. If the pair bounces to the upside, then it may try to go and visit the 1.2900 level, which could become a resistance. To the downside we can find some levels that could also act as supports in case the pair continues dropping. For instance, the 200 day EMA (blue line), around the 1.2738 level could be its closest support, followed by the 1.2700 level. But a level that could act as a better support is the 1.2600 level, due to the fact that the zone acted as a resistance in the past and now could change its function to a support.

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The NZD/USD is struggling with the 200 day EMA

The New Zealand Dollar versus the US Dollar has had a good bullish trend that has taken it to the 200 day exponential moving average or 200 day EMA, around the 0.7034 level as shown on the daily chart. Usually, the 200 period EMA acts as a good support or resistance zone, especially on the higher timeframes and that is why we can see that the NZD/USD is having difficulty in breaking above that level with sufficient force. The stochastics indicator is showing us that the pair is over-extended to the upside and there is a good probability of seeing a bearish bounce. Therefore, the NZD/USD could bounce to the downside from the 200 day EMA zone. In case of a bearish bounce, its next support level could be the 0.6900 area, followed by the low that it made around the 0.6817 zone. On the other hand, the more time the pair spends around the 200 day EMA, the higher the probabilities of seeing a bullish breakout. If the price breaks to the upside, then the next resistance level could be at the 0.7100 zone.

Possible symmetrical triangle on gold

Gold had a good rally last week while the Dollar was weakening, but once it got to the 200 week exponential moving average zone, it stalls there and the bullish momentum dries down while the price consolidates around the 1256 level. The 200 week EMA zone at the 1256 level coincides with the 50% Fibonacci retracement of the fall that it suffered from the 1295 level to the 1214 level. On the daily chart we can see that the current consolidation has formed what it appears to be a symmetrical triangle. Due to the fact that the trend coming into the formation is bullish, there is a higher probability of seeing a bullish breakout, but the price of gold may actually breakout in any direction. In case of a bullish breakout, the next resistance level on gold is at the 76.4% Fibo around the 1276 level. Above the 1276 level, the next resistance is at the high that it made at the 1295 level from where it started falling. To the downside, in case of a bearish breakdown, the next support level is at the 200 day exponential moving average around the 1238 level. Below the 200 day EMA, its next support is at the low of the 1214 level from where it started retracing to the upside.

Will the USD/CAD continue falling?

The US Dollar has been very weak versus its main counterparts due to all the political risk that has been going on in the United States, but versus the Canadian Dollar it has fallen even more after the recent rally in oil. Oil and the Canadian Dollar have a positive correlation and that is why when crude rallies, the “Looney” (Canadian Dollar) also rallies. On the daily chart of the USD/CAD we can see that the pair has fallen below its 55 day EMA (purple line) and below the 1.3500 level. If the price continues dropping, then it may try to reach the 1.3400 level, but a more important support level is at the 200 day EMA (blue line) at the 1.3348 level. In case the pair goes back up and breaks above the 55 day EMA, then its next resistance zone is at the 1.3600 level, followed by the 1.3700 and finally by the 1.3800 level.

Will the Dollar continue falling?

The Dollar Index is still very weak, the US currency continues under pressure due to the political risk that is being felt in the United States and it may continue falling during next week. On the daily chart of the Dollar Index we can see that after breaking below the 98.00 level, the bearish momentum accelerated and index came to the 97.00 zone where it is trying to stall a little bit its drop. However, it is possible that the Index may break below the 97.00 level to go and visit the 96.00 level, due to the fact that the 55 day moving average (purple line) has a good angle of inclination to the downside and it may cross below the 200 day exponential moving average (blue line) at the 99.14 level. If the 55 day EMA crosses below the 200 day EMA then if will be confirming a “death cross” pattern, which has bearish implications in the midterm. If the price does not break below the 97.00 zone, then it may stay consolidated between the 97.00 and the 98.00 levels, but to see a trend change on the index, the price must break above the 98.00 level.

Conflicting signals on silver

On the daily chart of silver we can see that the price had sustained a bearish trend from the 18.63 level to the 16.00 zone. From the 16.00 zone, silver started retracing to the upside during the last couple of weeks and gets to the 17.00 level where it has stalled its correction. The MACD indicator is showing us that the bearish trend has changed to the upside, but on the other hand, the price of silver is bouncing from the 17.00 level to the downside. Therefore, we have conflicting signals on the daily chart of silver, because on top of that, the 55 day EMA (purple line) has crossed below the 200 day EMA (blue line), confirming a “death cross” signal which has bearish implication in the midterm. The MACD indicator may be signaling a change of trend to the upside, but in order to confirm a real bullish trend, the price of silver must break above the 200 day EMA or above the 17.50 level. A continuation of the bearish trend must be confirmed with a breakdown of the 16.00 level.  

Oil goes back up

WTI oil has gone back up during today’s session after the US crude oil inventories came out lower during six weeks in a row, taking the price of WTI to the 200 day EMA (blue line) at the 49.35 level as shown on the daily chart. The 200 day EMA zone has been a hard to break resistance zone lately and coupled with the 55 day EMA (purple line), WTI oil could bounce to the downside from there. A little bit above the 55 day EMA we can see the 50.00 level, which in case of a breakout of those two moving averages could also act as resistance. Above the 50.00 level, any of the round number levels from the 51.00 to the 54.00 could also act as resistance. To the downside, the most relevant support is at the 48.00 level, but the 47.00, the 46.00 or the low at the 44.00 level could also act as support. If the 55 day EMA crosses below the 200 day EMA, then we could be having a “death cross” formation, which in the midterm has bearish implication for the instrument.

The EUR/JPY reaches the 200 week EMA

The 200 period exponential moving average usually acts as a very good support or resistance zone, especially on the higher time frames. That is why now that the EUR/JPY has reached its 200 week EMA at the 125.46 level, it is possible for that moving average to act as a resistance. The uptrend on the pair has been steady and today it accelerates even more after the economic growth data out of the Eurozone is showing that the economy is apparently out of the doldrums and heading higher. The probability that the European Central Bank will terminate its bond purchasing program is rising and that has supported the Euro versus its main counterparts. If the EUR/JPY bounces to the downside from the 200 week EMA, then the 123.00 level or the 122.00 level may act as support. Above the 200 week EMA, the next resistance level on the weekly chart is all the way at the 128.21 level.

Breakout and pullback pattern on gold

On the daily chart of gold we saw the other day that the price had fallen steadily until it broke below the 200 day EMA (blue line) around the 1238 level and reached the 76.4% Fibonacci retracement zone, which acted as a support. When the price bounced from the 76.4% Fibo to the upside, it came back to the 200 day EMA and completed what it is known as a breakout and pullback pattern. Exactly from the 200 day EMA, gold bounces back to the downside and if the following daily candles are bearish, then the price of gold may go back to the 76.4% Fibo, which may act once again as support. Below the 76.4% Fibo, its next support is at the 1200 area. Above the 76.4% Fibo, its next resistance could be the 200 week EMA at the 1256 zone. In order for gold to continue higher, risk aversion needs to come back into the markets, but for now it may just try to confirm the breakout and pullback pattern and maybe continue lower if risk appetite rises again.

The Dollar Index pulls back

On the daily chart of the Dollar Index we can see that the instrument has pulled back beneath the 200 day EMA, blue line, around the 99.28 level. The previous candle is in the shape of a shooting star, which is a bearish reversal pattern. If the following candle is also bearish, then the index may continue falling maybe trying to visit the 98.41 level, which could act as support. Next week we don’t have a lot of fundamental data out of the US, but movements on the Euro or the Pound may influence the Dollar Index. Another possible scenario is that the index may stay consolidated around the 200 day EMA without taking a clear direction. To the upside, the index may try to go and visit the 100.00 level, but a much better resistance could be the 101.51 zone, followed by the high at the 102.16 level.

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The Dollar Index goes back up

The Dollar Index breaks again above the 200 day EMA (blue line) at the 99.28 level and tries to regain its bullish momentum. If the index continues rallying, its next resistance zone could be the high that it made at the 101.25 level. Another possible scenario is that the index could go a little bit higher to then come back to the 200 day EMA and form what it is known as a pullback and reverse pattern, where the 200 day EMA could act as a support and the index could continue heading higher. However, we must keep in mind that the 200 day EMA is very horizontal, which means that the instrument could enter into a consolidation around that zone, without taking a clear direction unless something extraordinary happens with the US fundamental data. If the Dollar Index breaks below the 200 day EMA, its first support level could be the 98.41 zone, followed by the 98.00 round number level. Below the 98.00 level, the index practically has the road clear to drop all the way to the 96.00 level.

Will silver change its trend?

Silver has been falling steadily since it made a double top pattern around the 18.63 zone as shown on the daily chart. Silver has been falling along with gold, but the drop has been caused mostly by a slowdown in the Chinese economy, which has hurt basically the whole commodity sector. The drop on silver from the 18.63 level can also be seen on the MACD indicator, which is still showing a bearish trend, but the histogram’s bars are getting smaller than the previous ones and that is a sign that the trend is losing its strength. On the daily candles we can also see a weakening of the trend as the last few candles have a doji or spinning top formation, indicating that the commodity is undecided at the moment. The price of silver has come very close to the 16.00 zone, which could act as support and from where it may try to bounce to the upside. In case the price bounces to the upside, its next resistance could be the 16.76 level. To the downside, its next support could be the 15.00 level.

The USD/JPY nears its 76.4% Fibo

The Fibonacci retracement levels that have the highest probability of acting as support or resistance are the 61.8% and the 76.4%. When the price of an asset retraces a 61.8% of a drop or a rally, it usually stalls at that level and tries to change its direction, but if it breaks that zone and continues with its main trend, it will probably reach the 76.4% Fibo and at that zone it may change its trend. However, we must have in mind that the price may even break all of those levels, just as it does at any support or resistance zone. On the daily chart of the USD/JPY we can see that the pair suffered a strong drop from the 115.50 level to the 108.00 zone. From the 108.00 zone the pair starts to retrace to the upside as the Dollar gains ground versus the Yen amid a rise in risk appetite. Once it got to the 61.8% Fibo at the 112.67 level, the bullish momentum stalls momentarily, but then it continues rising. At the moment the pair is trying to visit the 76.4% Fibo at the 113.76 level and it is possible for that level to act as resistance.

Hammer formation on oil

WTI oil accelerates its bearish momentum at the beginning of today’s session and drops very fast to the 44.00 zone after breaking below the 47.00 level during yesterday’s session as shown on the daily chart. After touching the 44.00 level, the price of WTI oil bounces suddenly to the upside and reaches the 45.42 level, forming what it appears to be a hammer pattern. The hammer is a bullish reversal Japanese candlestick pattern that forms when there is a fast drop in the price of the asset and then a bounce to the upside during the same period of time that the candle is measuring. Once the price goes back up, it comes very close to the same level where the candle opened, indicating that there is indecision in the market. But the long lower shadow that is left on the candle is showing us that the bulls have taken control of the market and are trying to take the price higher. If the following candle is bullish, then the pattern is confirmed and most likely we will see a change in direction. In case the price of WTI oil keeps pulling back to the upside, then the 47.00 level may act as a resistance. To the downside, if the price goes back down, the 44.00 level may act as support.

Gold breaks the 200 day EMA to the downside

Gold has kept a very good bearish trend since it started retracing to the downside from the high at the 1295 level, very close to the 1300 zone. The price of gold breaks below the 200 week EMA at the 1256 level and from there the bearish momentum accelerates even more to take the precious metal below the 200 day EMA at the 1239 level. The drop has been so strong that the price of gold has broken during today´s session below the 61.8% Fibonacci retracement of the rally from the low at the 1200 zone to the high at the 1300 zone. From this point on, gold may continue falling and it is possible for it to go and visit the 76.4% Fibo at the 1218 level. Below the 76.4% Fibo, its next important support is at the 1200 zone. Since the commodity is clearly over-extended to the downside, there could be a bullish pullback, maybe towards the 200 day EMA, but the 200 week EMA at the 1256 level, which coincides with the 38.2% Fibo may act as a better resistance.

Oil retraces 100%

WTI oil remains very weak as shown on the daily chart and it has retraced 100% or it has made a parabolic retracement as it is also known to the 47.00 zone. The 47.00 zone may act as support for oil, but in case it breaks it, the bearish momentum may accelerate even more and WTI oil may reach the 44.78 level or the 44.00 level where it may find some support. To the upside, the 200 day EMA (blue line) at the 49.52 level could act as resistance along with the 50.00 level. Above the 50.00 level, any of the round number levels all the way to the 54.00 level may act as resistance, but the most important resistance is at the 55.20 level. The crude oil inventories data out of the US has shown a small reduction in the production of oil, but it has not been enough to cause the price of WTI oil to stop falling.

Gold continues retracing

Gold has been falling during the las few weeks as shown on the daily chart and drops below its 200 week EMA around the 1256 level. The bearish momentum accelerates below the 200 week EMA and at the moment it is getting closer to the 200 day EMA around the 1239 level. The 200 day EMA could act as a support for gold and its price may try to bounce to the upside from there. However the zone between the 200 week EMA at the 1256 level and the 200 day EMA at the 1239 level has been a congestion area in the past, therefore, it is possible for the price of gold to stay stuck in this zone, oscillating back and forth without taking a clear direction. In case gold breaks below the 200 day EMA then the commodity may have the road clear to go and visit the 1200 level, where we can see on the chart that the price made a double bottom formation causing it to stall there. To the upside, the most relevant resistance zone is at the 1300 level, where it has made its most recent high.

Gold retraces to the 200 week EMA

During the last three weeks gold has been retracing to the downside, since it made a high around the 1295 level, very close to the 1300 level. On the weekly chart we can see that gold has retraced to its 200 week EMA, which in the past it has acted as a resistance and now it could act as a support. The 200 period EMA usually acts as a very good support or resistance level, especially on the higher timeframes. Now that the price has broken above the 200 week EMA and it has come back to it, a breakout and pullback pattern may be developing around that zone. If the price of gold bounces to the upside from the 200 week EMA (blue line) around the 1256 level, then the breakout and pullback pattern may be completed and gold may try to go and visit again the 1300 zone. If the price breaks below the 200 week EMA, then it will practically have the road clear to go and visit the 1200 level in the midterm, but which could act as support.