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Technical Analysis 4/7/2017

July 4, 2017
By Antonis Vasloos
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EUR/USD: BULLISH RALLY LOSING MOMENUTM

Outlook: Bullish

It was a week of milestones for the euro, which is coming off fresh 14-month highs against the dollar. The EUR/USD maxed out at 1.1443 last week, as broad market forces continued to favour the common currency. Although the outlook remains bullish, the 1-hour chart indicate that short-term momentum may be slowing. The pair faces immediate support at the 1.1380 level. On the upside, immediate resistance is located at 1.1460.

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GBP/USD: CABLE APPROACHES CRITICAL RESISTANCE TEST

Outlook: Bullish

Cable is riding a tailwind after last week’s impressive 250-pip rally. Price action is strengthening, with the 50-day simple moving average (SMA) converging on the 200-day SMA. Prices faced overbought resistance at the start of Monday’s session, leading to a slight drop from last week’s high. The GBP/USD is converging on the high from 22 May, which offered fierce resistance during the previous two rally attempts.

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WTI OIL: CRUDE EYEING EIGHT-DAY WINNING STREAK

Outlook: Bullish

Crude’s reversal showed no signs of stopping on Monday, as prices rose for an eighth consecutive session on route to nearly three-week highs. Relative strength is overbought, which suggests that upward movement may be limited in the coming days. WTI has pulsated above the 38.2% Fibonacci level going all the way back to the May high. The reversal is now eyeing the 50% Fibonacci retracement.

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GOLD: FAILED RALLY LEADS TO SHARP REVERSAL

Outlook: Bearish

The play on safe havens continued to weaken Monday, as gold prices approached the 26 June swing low of $1,235.44. Bullion was last seen trading near session lows, as prices continue to struggle for momentum. The latest breakdown is concerning from the perspective of the bulls, who have failed to mount a significant rally in the face of a plunging US dollar. The yellow metal’s failure to rally suggests that the gold-dollar divergence trade is wavering.

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