Technical Analysis 20-03-2017
By Antonis Vasloos
The euro opened the week in positive territory against the dollar, building off last week’s post-FOMC gains. The EUR/USD was up 0.3% at 1.07610 early Monday, its highest in nearly six weeks. The pair is approaching the upper end of a four-month range.
Short-term resistance is at the 38.2% Fibonacci retracement. A close above this key barrier exposes the 50% retracement level near 1.1000. The outlook remains neutral with prices hovering too close to the immediate resistance to provide tangible short-term opportunity.
The British pound caught a favourable tailwind last week, as the dollar succumbed to a ‘buy the rumour, sell the fact’ scenario following the FOMC rate decision. However, cable’s rally stalled overnight as the pair faced a heavy one-month trend resistance at the 61.8% Fibonacci retracement. A failure to extend the rally above this crucial level could knock the GBP/USD back toward the 50% retracement at 1.2337. As a result, the short-term outlook remains neutral.
Crude oil was back on the defensive Monday, as prices failed to extend last week’s modest gains, a sign investors were still bearish on the black commodity. U.S. West Texas Intermediate (WTI) futures were down 39 cents, or 0.8%, at $48.39 a barrel overnight.
Crude has very few favourable short-term catalysts after prices failed to return above $50 a barrel last week. Momentum is extremely weak, with the 1-hour RSI and stochastic indicator revealing oversold conditions for the commodity.
Gold prices rose on Monday, as a fumbling U.S. dollar triggered fresh buying interest in the yellow metal. The April futures contract was last seen hovering at $1,234.00 a troy ounce, on track for three-week highs.
Bullion’s $30 gain over the past week has exposed it to overbought pressures. Prices have extended above the upper Bollinger band, which is normally seen as a cue for a short-term correction. The Relative Strength Index (RSI) has also triggered an overbought signal, supporting calls for a corrective phase.