Technical Analysis 22/5/2017
By Antonis Vasloos
Technical Analysis 22/5/2017 | EUR/USD | GBP/USD | WTI Oil | Gold
The euro’s rally has stalled at the key 1.12 level, as overbought resistance stymied bullish attempts at higher valuations. The EUR/USD is overbought in the short-term, but is likely to present buy-on-the-dip prospects over longer time periods. The trend continues to favour the common currency. Measures of momentum are also positive, signaling continued upside for the pair.
Cable is straddling the psychological 1.30 level at the start of the week, as the British pound looks to extend its recent rally. The GBP/USD exchange rate is down 0.2% overnight, a decline that favours dip-buyers. The 1-hour Bollinger Band formation suggests the pair is hovering near oversold levels. A breach of the lower band could lead prices to springboard back toward the 1.3015 region. Short-term, the pound is likely range-bound against its US counterpart. Longer term prospects are more favourable.
Crude prices soared last week, breaking above $51.00 a barrel for the first time since mid-April. Prices have moved above the 61.8% Fibonacci level, signaling at a possible re-test of the April swing high closer to $54.00 a barrel. However, the path upward is expected to be choppy. West Texas Intermediate (WTI) is considered strongly overbought according to the Relative Strength Index (RSI). Nevertheless, the outlook remains favourable.
Gold has staged a large recovery over the past two weeks, but the path higher has been inundated by stiff resistance tests near the 50% and 61.8% Fibonacci levels. The 61.8% level proved to be a formidable resistance earlier last week. Prices on Friday settled below the 50% retracement. Bullion needs to clear these technical hurdles to extend its rally back toward April highs. A failure to do so could trigger a downward correction in the short term.