False breakout on gold

A false breakout is when the price of an asset manages to break above an important resistance level or below an important support level, but the momentum is lost and the price cannot continue further, only to fall right back to the consolidation area where it was before. On the daily chart of gold we can see that the commodity was consolidating during the last 22 sessions in between the 200 day EMA (blue line) and the 55 day EMA (purple line). During yesterday’s session, the precious metal broke above the 55 day EMA and came close to the 1300 level without touching it. The bullish momentum was not enough and today the price drops below the 55 day EMA and enters the congestion area where it was before. From this point on the price may head in any direction. Above the 55 day EMA at the 1283 level, its next resistance is still the 1300 level. Below the 200 day EMA at the 1268 level, its next support level could be the 1200 zone.

Will gold keep its bullish momentum?

Gold has finally broken out of the consolidation where it was stuck, but will it ultimately break above the 1300 level? God has been consolidating during the last 22 sessions between the 55 day EMA (purple line) and the 200 day EMA (blue line). During this Friday’s session, the price managed to break above its 55 day EMA at the 1283 level. The price of gold comes close to the 1300 level, but that zone may act as resistance. Gold still has not broken above the 1300 level. A breakout above the 1300 level will clear the road for gold to reach the peak at the 1357 level. To the downside, its most relevant support is the 200 day EMA at the 1268 level, due to the fact that the price has already bounced to the upside on several occasions from that moving average. 

The USD/CAD comes near the 200 day EMA

The USD/CAD ties to go back to its midterm bullish trend after having retraced to the downside as shown on the daily chart. The pair managed to drop below the 200 day EMA (blue line), but it did not reach the 55 day EMA (purple line). The USD/CAD has been in a good bullish trend from the low that it made at the 1.2060 level, even though oil has been rallying and it should have supported the Canadian Dollar. Normally, the 200 period EMA acts as a good support or resistance zone and that is why if the USD/CAD reaches that moving average, it may try to bounce to the downside from there. However, the USD/CAD may also try to break above the 200 day EMA and maybe go and visit the 1.3000 level which could act as resistance.

The EUR/USD breaks above the channel

The EUR/USD was in a well-defined bearish channel as shown on the daily chart, but yesterday the pair rallied above the upper trend line of the channel to break today above the 1.1800 level. Despite the strong rally, the EUR/USD losses its momentum and drops back during today´s session to form what it appears to be a shooting star pattern on the daily candle. The shooting star pattern is a bearish reversal pattern and if tomorrow’s candle is bearish, the formation will be confirmed. On the other hand, the 1.1700 level may act as support, but if the price breaks below the 1.1700 level, then the pair will be entering again the bearish channel with some supports at the 1.1600 level or the 1.1500 level where we can find the 200 day EMA. To the upside, its next resistance level could be the 1.1900 level.

Euro rises after the German data

The Euro gains a strong bullish momentum versus its major counterparts after the German data showed that its economic growth was higher than the United States’ during the third quarter. The data supports a possible monetary policy change by the European Central Bank and that is why the Euro rises. On the daily chart of the EUR/JPY we can see a strong bullish momentum that took the pair above the 133.00 level and reaches a high at the 133.82. The 134.00 level could act as a resistance along with the highs at the 134.47 level, but in order for the pair to go back to its bullish trend in the long term, the price must break above the 134.47 level. Regardless of the strong rally, the EUR/JPY may try to pull back, in case of a bearish retracement, the pair may find some support at the 133.00 level. Below the 133.00 level we can see some interesting supports at the 132.00 level where we can find the 55 day EMA followed by the low of the range at the 131.37 level.

Will the Kiwi go back to its bearish trend?

The Kiwi or the NZD/USD was retracing to the upside from the 0.6800 zone as the probabilities of a rate hike by the Reserve Bank of New Zealand got higher amid a warning about rising inflation. However, once the pair got close to the 0.7000 level, the stochastics indicator visited the overbought level at the 80% zone and bounced to the downside at the same time that the price of the NZD/USD came back to the 0.6900 level. Since October 24^th, the 55 day EMA crossed below the 200 day EMA, forming what we know as a “death cross”, which has bearish implications in the midterm. Therefore, it is not unlikely to see the pair go back to its bearish trend, but at the same time the 0.6900 level may act as support. Additionally, in order for the NZD/USD to go back to its bearish trend, the price must break below the 0.6800 level.

Copper stays at support

Copper has found a good support zone at the 307.00 level where we can find the 55 day EMA as shown on the daily chart. Copper has already bounced from the 55 day EMA to the upside and even though it has been retracing to the downside during the last few weeks, the bullish trend is still in place in the midterm. Therefore, it is possible for the commodity to bounce to the upside from the 307.00 level. In case of a bullish bounce, its closest resistance is at the 318.38 level, followed by the peak that it made at the 325.86 level. In order for copper to go back to its bullish trend, it should break above the 325.86 level. In case of a bearish breakdown below the 55 day EMA, copper would practically have the road clear to fall to the low that it made at the 289.31 level.