Technical Analysis 10-02-2017
By Antonis Vasloos
The euro fell to three-week lows versus the dollar on Thursday, a sign the long-term downtrend was resuming after a periodic break. Prices were last seen trading at 1.0660, following a modest 30-pip drop during the previous session. Since hitting two-month highs at the start of February, the EUR/USD has declined 1.3%.
- Support (daily): 1.0633, 1.0609, 1.0570
- Resistance (daily): 1.0696, 1.0735, 1.0759
The common currency is trading well below its 200-day and 100-day simple moving averages. Price action has strengthened since the start of January, but has leveled off during the past week. The pair faces strong selling pressure at the upper end of the daily resistances. The outlook is neutral, but slanted to the downside in the absence of meaningful trading catalysts.
The British pound held steady against its U.S. counterpart on Thursday, finding support above the psychological 1.2500 level. The GBP/USD has entered a short-term correction after reaching a seven-week settlement high of 1.2661 on February 2. The linear regression indicator, a projection of future price movement, suggests the pound should be trading higher on a statistical basis. Both actual prices and the linear regression indicator are trading above the 100-day SMA.
- Support (daily): 1.2461, 1.2425, 1.2363
- Resistance (daily): 1.2558, 1.2621, 1.2657
Sterling continues to show signs of bullish persistence. However, recent gains in the U.S. dollar and uncertainty surrounding the British currency make it difficult to justify a long position on the GBP/USD at the moment.
Outlook: Neutral/Slightly Bullish
Crude oil bounced on Thursday, as prices resumed trading above the 100-day simple moving average following sharp declines at the start of the week. The U.S. West Texas Intermediate (WTI) benchmark for U.S. crude futures settled up 71 cents, or 1.3%, at $53.03 a barrel on Thursday. It was last seen trading at $53.07 a barrel.
- Support (daily): $52.51, $52.02, $51.67
- Resistance (daily): $5.35, $53.70, $54.19
Nymex crude has gained in back-to-back sessions, with trading volumes reflecting a highly liquid market. Relative strength is hovering just above 50, which is familiar territory for the futures contract over the past five weeks. However, the market remains firmly capped below the $54.00 a barrel level, which is also the high from early January.
Gold prices declined sharply overnight, as sentiment shifted in favour of riskier assets. Following four consecutive advances, bullion has now dropped in back-to-back sessions. It was trading 0.9% lower at $1,225.50 a troy ounce Friday morning, falling below the first daily resistance.
- Support (daily): $1,226.84, $1,218.57, $1,210.24
- Resistance (daily): $1,243.44, $1,251.77, $1,260.04
The pullback in gold on Friday echoed previous concerns that the market was entering overbought territory. This was evidenced by the upward track in the RSI, as well as prices converging on the upper Bollinger band. Despite the decline, gold remains in an uptrend marked by improved investor sentiment