Technical Analysis 12/5/2017
By Antonis Vasloos
The euro has been caught in a downward consolidation all week, as price reached the upper end of the Bollinger Band, thus triggering an overbought signal. The EUR/USD last reported 1.0871, and was little changed from the previous close. The pair is down roughly 100 pips from last week’s high, culminating in four consecutive losses.
The outlook remains neutral as the market recalibrates and the dollar stabilizes from six-month lows.
A rebounding US dollar has provided cable with strong headwinds this week after the GBP/USD failed to extend gains north of 1.30. The pair was last seen trading at 1.2887, little changed from the previous close and roughly 80 pips lower than last week’s high.
The 1-hour chart clearly shows a general downtrend after a double-top formation that failed to set new highs. The MACD signals the emergence of weak momentum, while the Stochastic indicator indicates a more moderate downshift.
US crude has mounted a steady recovery this week, as prices found strong support at the 23.6% Fibonacci level. This allowed prices to recover toward the 38.2% retracement. A clean break above this level would lead prices back toward the $49.00 handle.
WTI’s mid-term outlook remains clouded by negative market forces, which have been largely responsible for the contract’s recent volatility. For that reason, we maintain a neutral outlook.
Gold is wrapping up a mediocre week in the market, as prices remain vulnerable to fresh lows. The spot contract has traded below the 23.6% Fibonacci level for the duration of the week. Underlying momentum is improving, but the metal has not shown signs of a breakout. A rebounding dollar has also complicated bullion’s outlook. The outlook remains bearish until further notice.
Bullion was last seen trading the $1,226.00 range, which is around $11 higher than last week’s swing low.