Technical Analysis 19/4/2017
By Antonis Vasloos
Technical Analysis 19/4/2017 Outlook: Overbought
The euro broke to the upside on Tuesday and was last seen approaching a key resistance against the dollar. The EUR/USD is trading just below the 50% Fibonacci retracement. Price action is strengthening, but overbought pressures are likely to limit the pair’s advance over the short term. The common currency was last seen trading at 1.0724 dollars, a nearly three-week high.
Broad market forces drove the British pound to seven-month highs against the dollar. The GBP/USD was last seen trading well above 1.2800 after a more than 2% rally on Tuesday. Cable is significantly overbought, based on the 1-hour momentum indicators.
Price action since the Brexit referendum suggests the pound is likely due for a broad downward correction. Traders have increased their net-short positions significantly, a sign that a pullback is imminent.
Crude oil declined on Tuesday, as the market locked in a downward consolidation trend pattern back toward the $52.00 a barrel region. Prices are down more than 2% from last week’s swing high north of $53.50 a barrel.
Price volatility returned on Tuesday, reaching its highest level in more than a week. Price action has also weakened, with the 50-day moving average crossing below the 100-day MA.
Nymex WTI futures were down 0.1% in overnight trading on Wednesday.
Gold prices failed to play the dollar-divergence trade on Tuesday, a sign the market was approaching a critical mass below $1,300 per ounce. Bullion has pulled back from overbought levels and is consolidating toward the centre of the 1-hour Bollinger band.
The underlying trend remains bullish, as the yellow metal converges on a significant milestone. The spot price was last seen trading at $1,286.39 a troy ounce overnight Wednesday.