Technical Analysis 22-03-2017
By Antonis Vasloos
Outlook: Slightly Bullish
The bulls have taken control of the EUR/USD, and are pushing prices beyond a well-defined four-month trading range. Prices exceeded 1.0800 on Tuesday before peeling back below that level. The pair faces a confluence of resistance at the 50% Fibonacci retracement. The pair is well supported at the 38.2% retracement north of 1.07.
Relative strength is giving off bullish signals. Price action is also accelerating, with the 50-day and 100-day simple moving averages on upward trajectories.
The GBP/USD edged slightly lower on Tuesday, snapping a three-day winning streak. Cable was rangebound below 1.2500 on Wednesday, as prices ran into oversold momentum, which weakened the latest rally. The psychological 1.2500 level could be a stringent resistance test for the pair, which is eyeing the February 24 settlement high of 1.2556. A weak dollar has been the main catalyst behind the rally, and its swift recovery could spell the end of cable’s latest uptrend.
Crude prices declined sharply on Tuesday, reaching their lowest settlement in nearly four months and threatening to test the March 14 swing low. Prices have since recovered the $48.00 a barrel mark, but the outlook is tainted by weak momentum and bearish market signals. The March 14 swing low provides a good basis of support. On the upside, immediate resistance is located at the 23.6% Fibonacci retracement, which is currently around $49.00 a barrel.
Gold prices extended their recovery on Tuesday, with prices exceeding the critical 61.8% Fibonacci retracement. A close above this level would lead to a re-test of the trend high north of $1,260.00 a troy ounce.
Bullion has caught a favourable tailwind over the past week, as a divergent dollar continues to fuel buying interest in precious metals. Prices have recovered roughly $50 since March 9 and are poised to continue higher based on recent price action.