Technical Analysis 08-03-2017
Outlook: Slightly Bearish
The EUR/USD declined on Tuesday, adding to the previous session’s loss and pushing prices toward the 61.8% Fibonacci retracement. A break below that level could expose the 100% Fibonacci level, thereby reversing the latest rally that sent prices back above 1.0600. The euro was last seen trading at 1.0566 U.S.
Momentum on the euro is week, as evidenced by the sharp downward trajectory in the MACD. The common currency is likely to remain under pressure for the interim period as the dollar bulls gather strength.
The British pound printed fresh seven-week lows against the U.S. dollar on Tuesday, and was last seen making its way down the lower Bollinger band on the daily chart. This is the pair’s closes support on Wednesday.
The GBP/USD is hovering just above 1.2200, putting it at imminent risk of entering oversold territory, based on the stochastic indicator. A clean break below 1.2200 would send cable on a collision course with the 2017 settlement low of 1.2039.
U.S. crude futures resumed trading below the 50-day SMA on Tuesday, as the market consolidated within a familiar range. Nymex WTI crude is down more than 2% in March, and has retreated 3% from its 19-month peak on February 23.
Despite the recent loss of momentum, the ADX trend strength recently revealed a higher pivot low for the contract, a sign that prices were moving more strongly in the direction of the uptrend. Last month’s sharp break above $54.00 a barrel suggests further upside is in store in the medium term.
Demand for crude has plummeted this week due to negative correlation with other market forces. Bullion is trading near six-week lows on the Comex division of the New York Mercantile Exchange, having declined 3.3% from the February 27 settlement high of $1,258.80 a troy ounce. It was last seen trading at $1,217.60 a troy ounce.
On Tuesday, bullion crossed below the February low, which was also a major support area for the contract. The next confluence of support is located at the psychological $1,200.00 level. Prices recently approached oversold levels on the Money Flow Index.