"Fort Financial Services"- fundamental and technical analysis.
15.11.2016
Euro
General overview
The euro slightly retreated from eleven month lows amid mixed Eurozone data staying in the red in the light of Donald Tramp victory.
Current situation
The euro gapped lower at the open when prices jumped from 1.0850 to 1.0830 on Monday. The euro did not fill the gap and continued moving downwards, trading in a near-term descending channel. The pair met a barrier around 1.0800 which slowed down its downward trajectory during the Asian hours. After a brief consolidation phase the EUR/USD managed to break the level and extended its losses towards 1.0750. Sellers tested the level and set a daily low at 1.0727 post-European open. After testing 1.0750 the common currency temporally rolled back above the broken level. Sellers broke the level and moved prices lower in the NY session. The prices are well below the moving averages in the 4 hours chart. The moving averages direction is downwards. The resistance is seen at 1.0750, the support could be found at 1.0700.
According to the technical indicators the EUR/USD is oversold and holds within negative levels. The MACD histogram decreased which indicates the sellers’ strength. The RSI indicator is near overvalued territory, favoring a new move lower.
Trading recommendations
A break below 1.0700 will trigger the next leg of move for the pair. In this scenario sellers will push prices lower and may test the level 1.0650. To ease the downward pressure the EUR/USD pair needs to return to 1.0850.
Pound
General overview
There were no macroeconomic releases in the UK on Monday. Risk-off sentiment made risky retreat keeping the pound into fresh lows. The weak Chinese Industrial Production and Retail Sales weighed on the British pound as well.
Current situation
The pound gapped lower at the open on Monday. Prices dropped from 1.2594 to 1.2564 and almost filled the gap in the mid-Asia. The market reached the mark 1.2591 where a new wave of selling interest turned them around. Sellers moved the price lower and were able to test 1.2500 ahead of European opening. The pair pierced the level, recorded a daily low at 1.2450 and immediately rolled back. The neutral 200-EMA stopped the sellers’ downward impetus. The 50-EMA is crossing the 100-EMA upwards. Both lines keep heading higher. The current resistance is seen at 1.2600, the support is at 1.2500.
Technical indicators are now giving bearish signals. MACD decreased which indicates the buyers’ positions weakening. RSI left the overbought area and headed south.
Trading recommendations
The market seems to have switched its tone to bearish. The ongoing decline may be attributed to some profit taking from bulls after last week rally. A solid break below 1.2500 will increase chances of testing the 1.2400 mark. A move lower will neutralize the current positive scenario sending the pair to 1.2300.
Yen
General overview
The yen got under selling pressure after Bank of Japan Governor Haruhiko Kuroda's speech. Despite the positive GDP for Q3 domestic demand is too weak to support the Japanese currency.
Current situation
Fresh buying pressure around the U.S. dollar boosted USD/JPY to fresh highs. The price remained in an ascending channel, trading around its upper end. Buyers were able to test the level 108.00 where prices stayed till the end of the European session. Buyers broke the level and extended their gains in the NY session. The pair is well above the moving averages in the 4 hours chart. The 50, 100 and 200 EMAs accelerated their growth. All lines are pointing higher. The resistance can be found at 108.50, the support comes in at 108.00.
Technical indicators keep heading north within positive territory. The histogram grew which is a buy signal. RSI is consolidating within positive territory.
Trading recommendations
The greenback needs to break 108.00 to retain bullishness for further gain to 108.50. Sellers will do their best to return the market. The 106.50 level is their first target.
AUD/USD
General overview
The Australian currency slightly changed on Monday trading around monthly low as a weak Chinese data weigh on the AUD.
Current situation
The Aussie fell to the lowest in 4 weeks on Friday. The price left the near-term ascending channel and dropped below 0.7600. The market is in bears' hands now. The Australian currency found some temporal support around 0.7540 and remained confined within a trading range around the level. The pair went back and forth during the course of the session on Monday. Buyers failed to lead the price above 0.7560, at the same time sellers were unable to push prices below 0.7520. The price remained below the moving averages in the 4 hours chart. The 50-EMA crossed the 100 and 200 EMAs downwards in the mentioned timeframe. All moving averages are going downwards. The resistance is at 0.7570, the support can be found at 0.7540.
The technical indicators headed sharply lower within negative territory. MACD remained at the same level which confirms the strength of sellers. The RSI oscillator is consolidating within negative area.
Trading recommendations
If the downward trajectory remains intact we could see the pair extending down to the 0.7500 region during the next days. A bounce off the current support level may give bulls a chance to reverse some losses towards 0.7580.
XAUUSD
General overview
Gold prices remained under pressure trading around 5 month low being under pressure as U.S. elections results continued weighing on market sentiment. Majority of investors believe that the Fed will hike the rate in December that weighed on the market sentiment as well.
Current situation
Gold prices bounced off the border of the oversold zone on Monday. Sellers failed to extend decline below 1210 dollars per ounce and buyers took a chance to reverse some losses. The yellow metal broke the level 1220 and almost reached 1230 where the buying momentum lost its leg. The price faced another downside pressure and returned below 1220. Traders tested 1210 at the beginning of the New York session. Prices traded below the 50, 100 and 200 EMAs in the 4 hours chart. The moving averages are moving south. The resistance is at 1220, the support comes in at 1210 dollars per ounce.
MACD is in the negative territory. The RSI indicator is near overvalued territory, favoring a new move lower.
Trading recommendations
If risk-on sentiment remains intact gold prices will weaken further. A firm break below 1220 handle would open the door for testing the levels 1210 and 1200 dollars per ounce.
Brent
General overview
Oils prices traded onto fresh lows on Monday amid renewed glut concerns and growing number of the US drilling rigs. Moreover, investors doubt that the OPEC members will come to an agreement with the output freeze.
Current situation
Oil prices remained around their lowest mark in three months. Black gold resumed its decline after brief consolidation above 44.50 on Monday. Sellers broke the level 44.50 dollars per barrel mid-Europe and extended two straight sessions of losses towards the mark 44.00. Sellers were unable to move oil futures lower and spent the rest of the day around the fresh lows. Brent oil prices remained below the moving averages in the 4 hours chart. The resistance is at 44.50, the support comes in at 43.50 dollars per barrel.
MACD is in the negative territory. If MACD remains in the negative territory, sellers’ positions will strengthen. The RSI oscillator is consolidating within negative area.
Trading recommendations
The price eyes strong support at 43.50 loss of which would trigger further weakness towards 42.50 dollars per barrel.
DAX
General overview
Shares in European banks traded higher on Monday amid financial and mining sectors rise.
Current situation
DAX prices gapped higher at the open on Monday. Prices jumped and tested 10800 but failed to reclaim the level. The index bounced off the resistance and moved lower. Traders manage to test the 10700 support level which seems to be guarded by bulls as prices bounce off the level on every attempt to downside. The benchmark prices are above the moving averages in the 4 hours chart. The moving averages maintained their moderately bullish slope. The resistance is seen at 10700, the support is at 10600.
MACD decreased which indicates the buyers’ positions weakening. RSI remained within positive levels.
Trading recommendations
If sellers break the level 10700 they will be able to extend their losses towards 10600 and further out to 10500.
NASDAQ
General overview
The Nasdaq Composite fell on Monday amid Apple, Facebook and Microsoft shares decline. Moreover, the US stocks are affected by a selloff in the global bond markets as investors still weigh up Trump victory and his future policies.
Current situation
The Nasdaq Composite opened lower on Monday. The index remained under heavy selling pressure during the day. Traders broke the level 4740 and tested 4710 in the NY session. Prices bounced off the 100-EMA in the 4 hours chart and moved lower. NASDAQ broke the 50-EMA post-American open. The moving averages headed lower in the same chart. The resistance is seen at 4740, the support is at 4710.
Technical indicators are now giving bearish signals. MACD indicator is at the centerline. If the histogram enters the negative territory, that will indicate sellers’ growing strength. If MACD returns into the positive area the buyers will take control over the market. RSI is going south which confirms the current downward movement.
Trading recommendations
4710 seems the next probable bearish target. A daily close below the level would risk 4680.
*Analytical review is presented by the leading analyst of the broker Fort Financial Services, Alexander Kofman