The Pound stays weak

The GBP/USD could not confirm the break out above the 1.3500 level and falls back down slowly towards the 1.3300 zone where we can find the 55 day EMA (purple line). On the daily chart of the GBP/USD we can see that the price has formed what it appears to be a bullish flag. If the price breaks above the 1.3500 level, then the bullish flag pattern may be confirmed, but a break out of the 1.3600 level would be a better confirmation. On the other hand, the stochastics indicator has room to keep falling before entering the oversold area, therefore the price of the GBP/USD may try to drop below the 1.3300 level and visit the 1.3200 level. A better support could be the 1.3100 zone where we can find the 200 day EMA (blue line).

The EUR/USD loses direction

During this Friday’s session, the EUR/USD loses strength and falls to the 1.1750 zone, from where it bounces rapidly to the upside and goes back to the zone around its 55 day EMA (purple line), just below the 1.1800 level. Around that zone, the EUR/USD loses its direction and stays consolidated. The Stochastics indicator is in the oversold area, showing us that the pair may try to break above the 1.1800 level. Above that level, the next resistance could be the 1.1900 level. But since the pair may breakout in any direction, to the downside, the 1.1700 level may act as support, followed by the 1.1600 level or the 200 day EMA (blue line).

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The Dollar recovers

The Dollar index had fallen below the 93.00 level, but it couldn’t reach the 92.00 level. When the index was below the 93.00 level it made some interesting moves as shown on the daily chart. The long lower shadows on the daily candles below the 93.00 level indicate that the buyers came into the market when they saw it falling and prevented it from reaching the 92.00 level. Actually, below the 93.00 level we can see the formation of a double bottom. The Dollar has been benefited during the last few sessions due to the tax reform developments in the United States. At the moment, the Dollar index reaches its 55 day EMA around the 93.54 level. The 55 day EMA may act as resistance, but the index could try to go and reach the 94.00 level However, a better resistance could be found at the 95.00 level where we can find the 200 day EMA (blue line).

The 1.1800 level is support on the EUR/USD

The euro versus the Dollar has lost its bullish momentum once it got to the 1.2000 zone and pulls back to the 1.1800 level. Right now the 1.1800 level could act as support, because it was resistance in the past. On the daily chart of the EUR/USD we can also see that the 55 day EMA is very close to the 1.1800 level and could contribute to make that zone a very good support for the pair. Below the 1.1800 level, the most important supports are at the 1.1700 level and the 1.1600 level, along with the 200 day EMA. The stochastics still have a lot of space to keep falling, therefore the price of the EUR/USD may drop some more. To the upside, the most important resistance is at the 1.2000 level and the 1.2100 level.

High volatility on the Pound

The Pound versus the Dollar has had a lot of volatility during the last few sessions as shown on the daily chart. The GBP/USD has tried to break above the 1.3500 level on several occasions, but every time it tries to break above that level, it loses its bullish momentum and falls right back, leaving behind what is known as a false breakout. The pair has now fallen between the 1.3500 level and the 1.3400 level where it is stuck. We can also observe the volatility on the long shadows of the daily candles in both directions. To the downside, the zone that could act as support is the 1.3300, due to the fact that the level acted as a resistance in the past. For now the 1.3500 level is its most relevant resistance, but the 1.3600 level could also act as resistance.

Attention on gold

When an instrument has been consolidating for a long period of time we must pay attention to it, due to the fact that at any moment the price may take off in any direction. When there is high volatility in an asset, the best thing to do is to wait for it to calm down. When the market is in a range and it is consolidating, then we must be attentive to a possible breakout and higher momentum in any direction. We may be able to sense when an asset is about to break out, but we don’t know in which direction. On the daily chart of gold we can see that the precious metal has been boxed between the 200 day EMA at the 1270 level and the 1300 level. If we see a rise of volatility close to a support or resistance zone, the commodity may be getting ready to take off.