Technical Analysis 24-02-2017
By Antonis Vasloos
Outlook: Slightly Bearish
Euro sellers failed to take the initiative on Thursday, as the common currency rebounded against the dollar for a second consecutive day. The up-move sent the EUR/USD back toward the 1.06 region. Prices would later consolidate at 1.0581. The bounce higher was predicted by the pair’s earlier move below the lower Bollinger Band, which normally indicates that a short-term reversal is in play.
- Support (daily): 1.0545, 1.0510, 1.0484
- Resistance (daily): 1.0606, 1.0632, 1.0667
The euro’s slightly bearish outlook is confirmed by weak underlying momentum, as expressed by the Relative Strength Index.
The British pound rallied into a major resistance on Thursday, although the break higher was strong enough to boost bullish bets on the currency. The GBP/USD rose 100 pips to 1.2554 on Thursday, after making a brief attempt at the 1.26 level. We believe a more cautious outlook is necessary, given that the pair’s directionless nature as of late. Sterling began the month of February on a high note before buyers quickly lost interest, relegating it to a flat trading range for the rest of the month.
- Support (daily): 1.2466, 1.2377, 1.2329
- Resistance (daily): 1.2603, 1.2651, 1.2740
The pound has moved back above its 20-day simple moving average and continues to trade well above the 100-day SMA.
Outlook: Slightly Bullish
Crude prices rose to fresh 19-month highs on Thursday, a sign the black commodity was beginning to pull out of a three-month range. U.S. West Texas Intermediate (WTI) crude futures rose 76 cents, or 1.4%, to $54.35 a barrel. That was the contract’s highest settlement since July 2015.
- Support (daily): $53.90, $53.35, $52.83
- Resistance (daily): $54.97, $55.49, $56.04
Relative strength is rapidly approaching 60, while the MACD has moved into positive territory. Both indicators suggest momentum is building. However, crude faces a stiff resistance around the psychological $55 a barrel mark. It is unclear whether the current investing climate could support a sustained rally above this critical level. For now, the outlook is only slightly bullish.
Gold prices climbed to three-and-a-half month highs on Thursday, as technical traders capitalized on a down move in the U.S. dollar that may have set up a technical breakout for the yellow metal. Prices surged $16.50, or 1.3%, to close at $1,249.80 on Thursday amid higher than normal trading volumes. Bullion was seen trading at the upper end of the Bollinger Band overnight, a sign that prices may be approaching overbought levels. The same signal is confirmed by the RSI, which is nearing 70.
Support (daily): $1,240.76, $1,231.33, $1,226.56
- Resistance (daily): $1,254.96, $1,259.73, $1,269.16
The latest rally has many traders asking whether gold’s six-year bear market is nearing its end. Although it’s too early to provide an answer, bullion is likely to maintain its firm uptrend in the short term.