Daily Technical Analysis for Majors by Dukascopy

[KristinaDC]

XAU/USD awaits Fed decision

In result of the previous trading session, traders with bullish outlook pushed the pair simultaneously from larger descending and minor ascending channels. The surge was based on increasing tensions between the US and North Korea. However, near the weekly R2 at 1,294.86 it made a rebound, as markets started to worry about the upcoming Fed Meeting Minutes. Given the importance of this event, the pair is expected to move horizontally until 18:00 GMT. Fortunately for the gold, the southern side is protected by a combined support set up by the weekly R1 at 1,285.75 and the 55-hour SMA. If signals from the Fed will be hawkish, the rate most probably is going to fall to an intersection of the 100-, 200-hour SMAs and the 61.8% Fibonacci retracement level near 1,278.90

 

[KristinaDC]

EUR/USD soars to monthly PP at 1.1875

The common European currency continues to advance against the US Dollar four days in a row, fluctuating in a junior ascending channel. As some of the FOMC members were still uncertain about necessity of interest rate hike in December, the pair gained an impulse to reach the monthly PP at 1.1875. The fact that an average market sentiment became 69% bearish points out on an upcoming turnaround. Similar signal show certain technical indicators suggesting that the rate is overbought. On the other hand, there is a need to take into account that the pair is also moving and tends to reach the upper boundary of a large descending channel. In other words, whether the rate makes a rebound on continues the surge will greatly depend on the US PPI release and reaction on Mario Draghi speech.

 

[KristinaDC]

GBP/USD bypasses 200-hour SMA

In accordance with expectations, the currency exchange rate was consolidating before a release of the Fed meeting minutes. But as soon as this document was released, the pair expectedly sneaked through the 200-hour SMA and started to surge.

The fact that road to the south is obstructed not only by a combination of the 55- and 200-hour SMAs but also by the 100-hour SMA and the weekly PP suggests that the Greenback is unlikely to restore lost positions against the Pound even in case of better than expected US PPI data release. Accordingly, traders with bullish outlook most probably are going to try to push the pair to the area between the 1.3300 mark and the monthly PP at the 1.3320 by the end of the week.

 

[KristinaDC]

USD/JPY fails to break above 112.60

As it was expected, after reaching the weekly S1 at 112.19 traders tried to push the rate to the top. However, a combined resistance formed by the 55-, 100- and 200-hour SMAs in conjunction with the weekly PP at 112.81 expectedly neutralized this attempt. Moreover, the released FOMC meeting minutes showed some uncertainty regarding the need on another interest rate hike this year, which additionally devaluated the buck against all other major currencies. These facts suggest that the pair is unlikely to break in the northern direction today as well even if the US PPI will appear to be better than analysts expected. In support of this scenario speaks the fact that the average market sentiment remains 63% bearish. Plus the pair has formed a new descending channel.

 

[KristinaDC]

XAU/USD trades at 1,294.86

In line with expectations, the pair continued to move in a limbo between the weekly R1 and R2 in anticipation of release of the FOMC meeting minutes. As soon as it became clear that there remains some uncertainty about the upcoming interest rate hike, the buck started to lose value against the gold. As a result, the rate reached and even slightly overstepped the 1,294.86 mark. Accordingly, the pair is likely to continue the surge at least in the first half of the day before the US PPI data release. This assumption is partially based on the 55-hour SMA, which is rising together with the pair, and partially on two recently formed ascending channels. However, the fact that an area near 1,295.50 is blocked by the 55-day SMA suggests that the rate might be actually forced to turnaround.

 

[KristinaDC]

EUR/USD breaks from rising wedge

After surging in a minor rising wedge pattern, the rate made a breakout near the monthly PP 1.1875. The turnaround was additionally supported by decreasing number of unemployment claims and release of better than expected US Core PPI. Despite this favourable fundamental background the pair failed to break below the 1.1830 mark due to support set up by the 55-hour SMA. Moreover, an area near the 1.1810 level is additionally secured by the weekly R1 and the 100-hour SMA. From this perspective, the pair is not expected to slip to the bottom in the first half of the day. There are similar expectations for the northern side, which is obstructed by the above monthly PP. Therefore, further direction of the rate will heavily depend on release of information on the US inflation and retail sales.

 

[KristinaDC]

GBP/USD approaches 1.33

The British Pound had a very challenging trading session yesterday. Due to comments made by the EU Chief Negotiator Michel Barnier about a "deadlock" in Brexit negotiations the Sterling lost 116 basis points against the Greenback just in couple of hours. Despite a release of better than expected US Core PPI data, traders managed to return the pair to the pre-fall 1.3250 level. In the first half of this trading session the currency rate is expected to test a resistance near the 1.3290 mark. However, whether the cable will manage to soar and bypass the 1.3300 level or fall back to the 200-hour SMA near 1.3192 will depend on release of data about the US CPI and retail sales, which, in turn, will have major implications on decision about the need of another interest rate hike this year.

 

[KristinaDC]

USD/JPY moves below 112.20
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In line with expectations, the currency pair one more time failed to break through a combined resistance formed by the 55-, 100- and 200-hour SMAs that were slipping along the upper boundary of a recently formed descending channel. The fall of the rate was additionally supported by reports of another underground quake near North Korea’s nuclear test base. From technical perspective, the exchange rate is expected to continue to move to the south trying to reach an intersection of the bottom boundary of the pattern and the weekly S2 at 111.70. However, there is a need to take into account a release of information about the US inflation and retail sales later this day whose combined effect most probably is going to push the pair out of the channel.

 

[KristinaDC]

XAU/USD fails to slip below 1,285.75

Although the Bureau of Labour Statistics released a better than expected US Core PPI, the buck did not manage to make any significant advances against the yellow metal yesterday. The reason for that was a combined support set up by the 55-hour SMA in conjunction with the bottom trend-line of a rising wedge. Accordingly, today the pair is expected to make a breakout from this pattern. The fact that the northern side near the 1,295.00 level is secured by the 55-day SMA indicates on breakout to the bottom. Moreover, this direction is line with trade patterns theory. However, there is need to take into account traders’ reaction on release the US inflation and retail sales data, which might lead to active sell off of the Greenback.

 

[KristinaDC]

EUR/USD starts trading near weekly PP at 1.1810

In line with expectations, the currency pair continued to move horizontally in anticipation of release of information about the US CPI. Although the data appeared to be worse than expected, the rate failed to surge above the monthly PP at 1.1875. As a result, new trading week it started at the updated weekly PP at 1.1810, being squeezed between the 55- and 100-hour SMAs from the top and the 200-hour SMA from the bottom. This fact suggests that despite that the average market sentiment is predominantly bearish, the pair is likely to fail to pass through the 1.1783 mark in one go. However, since the pair has recently made a breakout from the rising wedge, in general, it is expected to stick with the southern direction.

 

[KristinaDC]

GBP/USD fails to surge above 1.3320

Although the US data release, in general, appeared to be worse than expected, the upside momentum was not strong enough to push the pair above the monthly PP at 1.3322. The presence of a recently formed ascending channel whose bottom boundary is backed up by the rising 55-, 100-, 200-hour SMAs suggests that the currency rate most probably is going to break through that resistance and continue to move to the north. On the other hand, there are two large unconfirmed channels who boundaries are located near the 1.3330 mark and that might turnaround the pair. Finally, there is a need to take into account that this week will be full of the UK data releases, including inflation and retail sales, that are expected to have a notable impact on further direction of the pair.

 

[KristinaDC]

USD/JPY trades near 111.88

In accordance with expectations, the currency exchange rate continued to move to the south within one-week long descending channel. The further deprecation of the buck was supported not only by the pressure of 55-, 100- and 200-hour SMAs that were moving along the pattern’s upper boundary, but also by the increased US CPI and ongoing war of words between the US, North Korea and Iran. At the moment, the northern side is additionally protected by the updated weekly PP at 112.13, while the southern side lacks of any notable technical barriers up until the weekly S1 at 111.43. These facts as well as the 56% bearish market sentiment suggests that in the nearest future the currency rate most probably is going to continue to move to the bottom.

 

[KristinaDC]

XAU/USD surges in two channels

Due to increase of the US Consumer Price Index, the yellow metal continued to advance against the buck simultaneously in two ascending channels. On the one hand, the pair is experiencing pressure from the 55- and 100-hour SMAs, which are continuously pushing it to the top. On the other hand, the pair faces a notable resistance level formed by the monthly PP at 1,304.85, which it has already failed to bypass once. There is a need to notice that intersection between the above two channels reminds another pattern, i.e. rising wedge. If this assumption is true, the pair has to make a breakout to the bottom somewhere between the 1,305 and 1,310 marks. However, if macroeconomic background will remain unfavourable, the rate most likely is going to surge to the 1,314 level.

 

[KristinaDC]

EUR/USD slips below 200-hour SMA

As it was expected, the currency pair failed to pass through the 200-hour SMA from the first attempt. However, a combined pressure of the 55- and 100-hour SMAs in conjunction with the weekly PP was too strong to allow the Euro to make any advances against the Dollar. As a result, the new trading session the rate started near the 1780 mark, facing no support barriers on its way up until the weekly S1 at 1.1735. This fact plus the 57% bearish market sentiment and an aggregate of technical indicators, which sends a clear sell signal, suggest that the currency pair is going to continue to move to the bottom, trying to reach the 100% Fibonacci retracement level at 1.1715. But there is a need to take into account an effect from release of the Euro Zone’s inflation data and German business sentiment.

 

[KristinaDC]

GBP/USD prepares for inflation release

Although the Pound had all means to continue the surge, but confident appreciation of the Dollar prevented the pair from breaking through the monthly PP at 1.3322. On the other hand, this rebound to certain extent confirmed that the pair is trading simultaneously in three different channels. The fact that market sentiment is neutral and an aggregate of technical indicators sends a mixed signal suggests that traders are preparing for release of the UK inflation data as well Governor Carney’s testimony. If experts’ prognoses will match with reality, the rate most probably is going to fall from the junior ascending channel straight to the 200-hour SMA near 1.32. In the opposite case, bulls will have a good chance to make another attempt bypass the above monthly PP.

 

[KristinaDC]

USD/JPY advances by 47 points

The Dollar edged higher against the Yen, as American officials confirmed their willingness to solve North Korean crisis through diplomatic means. The 47-pip surge pushed the pair out of a descending channel but then it stuck near the 112.14 mark that presented disposition of the 100-hour SMA and the weekly PP. A favourable informational background might strengthen the buck even more. Such scenario seems especially probable amid suspicion of existence of a new minor ascending channel. However, there is a need to take into account that the road upstairs is reliably secured by the 200-hour SMA. In the short run, this barrier is expected to force the pair to back down. But in larger perspective, as long as market sentiment will remain predominantly bullish, it has a chance to break to the top.

 

[KristinaDC]

XAU/USD breaks from rising wedge

In result of the previous trading session the price of gold decreased by more than 0.86% amid the better than expected New York Manufacturing Index release and lower interest for safe haven assets. From technical point of view, this plunge matched with a breakout from the rising wedge pattern, which formed at the intersection of two ascending channels. The fact that the exchange rate is now located below the 55- and 100-hour SMAs as well as the weekly PP suggests that appreciation of the buck is going to continue at least until the clash with 200-hour SMA near 1,287.05. The bearish scenario looks more plausible also from daily perspective, as it clearly shows how the pair failed to surge above the monthly PP at 1,304.85.

 

[KristinaDC]

EUR/USD reaches marked support

There are three facts that need to be described to update the situation.

First of all the pair has hit the previously speculated lower trend line of a medium term ascending channel pattern. The rate rebounded against the support after shortly touching it above the 1.1720 mark.

Secondly a rebound followed, which was already stopped on Tuesday morning by the resistance of the 55-hour simple moving average. The SMA is just the first one in a cluster of resistance levels.

Third and last the pair is set to be squeezed in by the medium support and the SMAs.

 

[KristinaDC]

GBP/USD back below 1.32 mark

On Tuesday morning the Pound had already lost the previously gained ground against the US Dollar, as the currency exchange rate traded below the 1.32 level.

The reason for that is quite unclear, as the pair had already passed the last resistance level above the 1.3250 mark during the early hours, when the rate suddenly began to fall.

However, after passing various support levels the pair’s decline was stopped by the combined support of the 55 and 100-hour SMAs.

In regards to the future outlook, it seems that the surge is set to continue, as the pair has broken the resistnace of the long term channel down pattern.

 

[KristinaDC]

USD/JPY retreats as expected

After reaching the high level above the 114.00 mark on Monday in the aftermath of the Japanese election the USD/JPY currency pair retreated back down to the support zone near the 113.20 mark. At that level the rate rebounded and offered a chance to adjust the drawing of the medium scale ascending channel pattern.

In general the rate faced no resistance levels up to the mentioned 114.00 mark, as it was being driven higher by the support of the 55-hour SMA. Moreover, the SMA was supported by the ascending lower trend line of the dominant medium scale channel up pattern.

Due to that reason it is assumed that the 114.00 mark will be reached once more.