The EUR/USD breaks above the 1.1800 level

The Euro versus the Dollar has reached levels that it has not visited since January 2015 and breaks above the 1.1800 level. The probabilities of the European Central Bank changing its monetary policy and starts to raise its interest rates are getting higher every day. On the weekly chart of the EUR/USD we can see that the rally on the pair has been steady and accelerates even more when the price broke above the 200 week exponential moving average (EMA) around the 1.1600 level. The pair is clearly over-extended to the upside, but it may continue rallying. If the pair keeps rising, its next resistance level could be the 1.2000 level, due to the fact that the zone is a very important round number area, but the 1.1900 level could also act as resistance. In case of a bearish pullback, the 1.1600 level where we can find the 200 week EMA may act as a support.

Oil gains bullish momentum

After the WTI Oil broke above the 48.00 level and above the 200 day EMA, the commodity has been rising in an orderly fashion until coming very close to the 50.00 level as shown on the daily chart. The 50.00 level could act as resistance and the price of WTI oil could bounce to the downside from that zone. In case of a bearish bounce from the 50.00 level, the WTI could form a breakout and pullback pattern on the 200 day EMA. On the other hand, a breakout of the 50.00 level, could take the price to the 51.00 level or the 52.00 level. The 52.00 level could act as a resistance, but a better resistance could be the 53.00 level. If the price of WTI oil manages to break below the 48.00 level, any of the round number levels from the 47.00 to the 42.00 level could act as support.

Possible consolidation on the Dollar Index

The Dollar Index has kept a very good bearish trend, but once it got to the 93.00 level, the index tries to stall its drop there as shown on the daily chart. The Dollar Index bounces from the 93.00 level to the 94.00 where the 200 week EMA is precisely at that level. Even though the bearish trend is still in place, there is a possibility of the 200 week EMA acting as a resistance and the index may consolidate between the 93.00 level and the 94.00 level. On the other hand, if the weakness persists on the Dollar, then the instrument may break below the 93.00 level to go and visit the 92.00 level. The stochastics indicator is trying to come out of the oversold area, showing us that the index may try to correct to the upside. If the Dollar Index breaks above the 94.00 level, then the next resistances could be the 95.00 level or the 96.00 level where the 55 day EMA is very close to that zone. 

61.8% Fibo retracement on gold

Gold goes back to its bullish trend during today’s session while the Dollar continues dropping after the FED’s statement. The 55 day EMA, purple line, has acted as a good support on gold and from that level the price of the precious metal bounced to the upside and reaches the 61.8% Fibonacci retracement around the 1260 level. Gold has also broken above its 200 week EMA at the 1254 level. The 61.8% Fibo may act as a resistance, but a breakout may take the price of gold to the 1274 level where we can find the 76.4% Fibo. Above the 76.4% Fibo, the next important resistance on gold is at the 1300 zone. A bearish bounce from the 61.8% Fibo may cause the price of gold to fall to the 55 day EMA and 200 day EMA zone, around the 1242 level. The 200 day EMA may has a good probability of acting as a support.

WTI oil breaks its 200 day EMA

WTI oil has broken during today’s session above the 48.00 level and above the 200 day EMA as shown on the daily chart. Oil accelerates its bullish momentum after Saudi Arabia announced that it will cut its crude production. WTI oil rallies 3.3% and reaches a high of more than a month ago to reach a daily peak at the 48.64 level. Even though WTI oil has broken above its 200 day EMA, the zone may still act as a resistance and the price may try to pullback from there. In case of a pullback, The 47.00 level may act as a support, but if oil goes back to its bearish trend, any of the round number levels all the way to the 42.00 zone may act as support. To the upside, if the rally continues, then the next resistance level may be the 50.00 level. 

The USD/CAD is stuck on the 200 week EMA

The US Dollar versus the Canadian Dollar has fallen to a very important support zone around the 1.2500 level as we can see on the weekly chart. The Greenback has been pressured to the downside lately by all the internal issues in the United States, while the Canadian Dollar has been supported by the recent rally on oil. On the weekly chart of the USD/CAD we can see that the 1.2500 zone has already acted as a support in the past and it may very well act again as a support, especially when the 200 week EMA is exactly at that level. The 200 period EMA usually acts as a good support or resistance zone, especially on the higher time frames like the weekly chart. If the USD/CAD manages to bounce to the upside from the 200 week EMA, then it could go and visit the 1.3000 level, which could act as a resistance. If the pair breaks to the downside, then the 1.2300 zone could act as its next support.

Drop on the Dollar persists

The Dollar index has closed the week to the downside, dropping below the 200 week exponential moving average and below the 94.00 level as shown on the weekly chart. The stochastics indicator is below the 20% line and stays in the oversold zone. The Dollar index may continue dropping during the next week, but due to the fact that the stochastics indicator is below the 20% line, the indicator may consolidate in that zone, because it cannot drop below the 0% level. The instrument is clearly over-extended to the downside and it may correct or pullback at any moment, but if it continues dropping, then its next support levels could be the 93.00 level or the 91.88 level. The more it drops, the higher the probabilities of seeing a bullish pullback. To the upside, in case of a retracement, its next resistance levels could be any of the round number zones like the 95, 96, 97, or 98 levels. 

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Is the AUD/USD in overbought zone?

The AUD/USD has been having a very good rally starting last week when the US Dollar started falling. The Australian Dollar has also gotten support from the Reserve Bank of Australia’s minutes, where the central bank is showing a heighten optimism over the Australian economy. Additionally, the upbeat fundamental data out of China has raised the optimism on the Australian markets due to the fact that China is the main trading pattern of Australia. On the daily chart of the AUD/USD we can see that the pair has broken above the 0.7700 level and accelerates its rally until it broke above the 0.7800 level. Since last Monday the pair has rally again and breaks above the 0.7900 level to come very close to the 0.7986 level where we can find the 200 week EMA. The Stochastics indicator is showing us that the pair is in overbought zone and it could be getting ready to make a retracement or correction. The angle of inclination and separation of the 55 day EMA (purple line) and the 200 day EMA (blue line) is also showing us that the pair is over-extended to the upside and probably ready for a pullback.

The USD/CAD is getting closer to the 200 week EMA

The USD/CAD has been in a bearish trend for many different reasons. First, the Bank of Canada has raised its interest rates and that has supported the Canadian Dollar. Oil has been gaining some ground, helping the Looney as well and on the other hand the US Dollar has been weakening by its own problems. All of that has caused the USD/CAD to drop to the 1.2600 level, but the pair may drop to the 1.2500 level where we can find its 200 week EMA. It is possible for the 200 week EMA to act as a support, especially when the pair is over-extended to the downside. If the pair bounces from the 1.2600 to the upside, then its next resistance zone could be the 1.2900 level. 

Gold completes a head and shoulders pattern

A few days ago we identified an inverted head and shoulders pattern on the daily chart of gold. The inverted head and shoulders pattern is a bullish reversal formation which is confirmed once the price of gold broke above the neckline (red line), around the 1225 level. The weakness on the Dollar has supported the rally on gold and now the commodity has reached its 200 day EMA around the 1241 level, where we can also find the 55 day EMA. If gold manages to break above the 200 day EMA then its next resistance could be the 200 week EMA around the 1254 level. Above the 200 week EMA there are no more resistance until the 1300 zone. If there is a bearish bounce from the 200 day EMA, then its next support could be the low that it made at the 1204 level.

Pound accelerates its bullish momentum

The GBP/USD pair has broken above the 1.3000 level and it has come very close to the 1.3100 zone. The rally on the Pound comes on the back of weakness on the US Dollar after the disappointing data on inflation and retail sales out of the United States. Due to the fact that the probabilities of another rate hike by the FED during its next meeting have fallen, the Dollar has been weakening, helping the rally on its main counterparts, including the Pound. Even the emerging market currencies has benefited from the drop on the US Dollar. On the daily chart of the GBP/USD we can see that the pair may find some resistance at the 1.3100 zone, but if it breaks that zone to the upside, then its next resistance level could be the 1.3300 zone. On the other hand, due to the strong rally, the pair may try to correct during next week, but the 1.3000 level may change its function from resistance to support. Below the 1.3000 level, the 1.2900 or the 55 day EMA (purple line) may also act as support levels.

The Dollar in support zone

The Dollar Index has touched two times the 95.22 level as shown on the daily chart and it may possibly form a double bottom formation. The double bottom formation is a bullish reversal pattern when it is completed. In order for the double bottom pattern to confirm itself, the Index must break above the 96.00 level with two or three bullish candles. But we must keep in mind that the 97.00 level may act as resistance, especially when very close to that level we can see the 55 day EMA (purple line). For now, the Dollar Index stays consolidated between the 95.22 level and the 96.00 level. If the Index breaks below the 95.22 level, then its next support level could be the 95.00 level, but a better support could be the 94.00 level. To the upside, above the 97.00 level, the 98.00 could act as resistance along with the 200 day EMA (blue line) at the 98.33 level.

The US Dollar falls rapidly versus the Yen

Janet Yellen’s words in front of congress have weaken the US Dollar and that is we can see on the daily chart of the USD/JPY that the pair has fallen rapidly to the 113.00 zone. It is possible for the 113.00 level to act as support, but the pair stays very weak and it could try to go and visit the 112.00 level where we can find the 55 day EMA (purple line). The 200 day EMA (blue line) at the 111.48 level may also act as support. Below the 200 day EMA, the pair has practically the road clear to fall all the way to the low at the 108.80 level. The Stochastics indicator has also changed direction rapidly to the downside and that could be an indication that the pair may continue dropping. To the upside, the 114.49 level which has already acted twice as a resistance may stop the price there in case of a bullish continuation.

Will the retracement on the Pound continue?

The GBP/USD has been retracing to the downside during the last few weeks and breaks below the 1.2900 level to reach its 55 day exponential moving average (purple line) around the 1.2829 level. The 1.3000 zone has acted as a good resistance in the past and around mid-May the pair also bounced to the downside from that area. At the moment, the 55 day EMA could act as a support and the GBP/USD may try to bounce to the upside, especially if the probabilities that the Bank of England may raise its interest rates rise during the next few days. The pair may still try to break below the 55 day EMA and reach the 1.2800 level. Below the 1.2800 level, its 200 day exponential moving average (blue line) around the 1.2768 level could act as support, but the levels with the highest probabilities of acting as supports are located at the 1.2700 or the 1.2600 zones. In case of a bullish bounce from the 55 day EMA, the pair may break above the 1.2900 level to try to reach the 1.3000 zone.

Gold breaks key support level

Gold has broken below the 1214 level, which has acted as support in the past. The drop in gold has been caused mostly by a recent rally in the US Dollar. Will gold continue falling? Yesterday’s daily candle has closed in the shape of a hammer. The hammer is a bullish reversal candlestick pattern, but in order for the pattern to be confirmed, the latest candle must turn positive. If the price of gold stays below the 1214 level, then it is possible for the precious metal to continue falling. In case of a bearish continuation, the 1200 level may act as support, followed by the 1180 level. If the present candle turns positive, then gold may change direction to the upside and it may try to reach the 1242 level where we can find the 200 day exponential moving average.