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.