Technical Analysis 13-03-2017
Outlook: Slightly Bullish
The euro broke out of another downcycle last week, and is currently trading at more than one-month highs against the dollar. The EUR/USD advanced 0.2% to 1.0692 early Monday, having gained around 150 pips over the last three sessions.
The pair has entered a strong uptrend, as demonstrated by the latest ADX value. Price action is also strengthening, with the 20-day simple moving average crossing above the 100-day SMA at an accelerated pace. However, the euro faces a strong technical hurdle around the 1.0800 level that will be difficult to overcome.
The British pound lost more than 100 pips to the dollar last week, putting the currency in a precarious state. The GBP/USD is trading just above Thursday’s seven-week lows, but is contained below 1.2200. Prices were last seen hovering at 1.2174, down nearly 400 pips from three weeks ago.
The 4-hour chart formation confirms bearish headwinds for the pair. Both the RSI and stochastic indicator have moved off oversold levels, but continue to show weak underlying momentum.
Oil prices plumbed new lows on Monday, as prices briefly fell below $48.00 a barrel for the first time since early December. The West Texas Intermediate (WTI) benchmark for U.S. crude was last down 36 cents, or 0.7%, at $48.13 a barrel.
Crude’s price outlook is extremely bearish following last week’s 10% plunge. Relative strength is approaching oversold levels, with price action on the 20-day, 50-day and 100-day simple moving averages on a sharp downward trajectory.
Gold futures edged higher on Monday after briefly falling below $1,200 a troy ounce last week. The April futures contract was last up 0.3% at $1,204.80 a troy ounce, having declined roughly 4.5% from its Feb. 27 swing high. The modest recovery is pushing bullion in the direction of the 23.6% Fibonacci retracement, although a stronger effort is needed to extend prices beyond that point. This retracement level is likely to provide strong near-term resistance. Based on the latest price movement, Friday’s swing low seems like a reasonable bottom for now.
Meanwhile, the MACD moved back into positive territory on the 1-hour chart, but the underlying trend remains firmly tilted to the downside.