Charts of interest: EUR/USD : GBP/USD : USD/JPY : Gold : WTI

EUR/USD

The euro has added over 330 pips in just two days prior to a slight consolidation that has set in overnight. This is a move that has pulled it well clear of the top of the old pivot band $1.1050/$1.1100 and opens the upside for the next resistance around $1.1300, whilst the top of the long term trading range around $1.1460 should not be ruled out. The key feature here is the momentum, with the RSI into the high 60s, this is consistent with the key moves that have continued to run higher. I would be looking to use weakness as a chance to buy now. The hourly chart shows a slight drift lower overnight as some of the near term overbought position unwinds, however there is now good near term price support around $1.1150, with further support back at $1.1070, whilst the old pivot levels at $1.1050 and $1.1100 will also provide key levels. It is Non-farm Payrolls so a positive report could drag the euro lower but I would not see it as a game changer, more likely to be an opportunity to buy again.

EURUSD 05022016

GBP/USD

Mark Carney and the Bank of England tried desperately to talk sterling lower through yesterday’s Inflation Report. The resulting candle was a sort of “spinning top” candlestick that lends the chart some uncertainty. However, the recent strong move higher has driven stronger momentum with longer term improvement in the RSI and Stochastics also more positive. The momentum has just tailed off a touch this morning and with Non-farm Payrolls today this is not to be unexpected. I am looking at the Fibonacci retracements of the big December/January sell off from $1.5278/$1.4079 and the 50% Fib level at $1.4659 was yesterday’s high almost to the pip. So watch 38.2% Fib at $1.4522, whilst 23.6% Fib at $1.4353 is already a key pivot area. The set up of the momentum would suggest there is more upside in this recovery and that corrections should be seen as a chance to buy. The 61.8% Fib is an overhead target around $1.4800 being an old pivot level too.

GBPUSD 05022016

USD/JPY

What an incredible turnaround on the chart following last week’s gains from the BoJ easing. It is almost the perfect storm for Dollar/Yen to go lower when a significant bout of dollar weakness is driven through concerns over the US economy. The pair has dropped sharply to once again test the support around 116.50. The old level was 116.46 of the August spike low but this was tested on several occasions in January (including one occasion being intraday broken). The bears will point to the lowest close in 13 months and a move that is backed by strongly deteriorating momentum (Stochastics especially). The spike January low was 115.96, but a close below 116.50 would surely open the critical support around 115.55 which marks the neckline of a huge head and shoulders top pattern. The bulls desperately need a strong payrolls report, whilst the BoJ looks on with considerable concern. There is initial resistance around 117.00 with further resistance in the 118.00/118.25 range.

USDJPY 05022016

Gold

An strong run higher continues, adding as much as $24 in the past two days. The move is also now breaking through the top of the uptrend channel. The upside targets that I am looking at continue to be breached, with the next real resistance being the October highs between $1182/$1190. The consistent strength of the momentum is certainly commendable, but we now have a situation where the RSI is above 70 which is the highest for over a year. This can either mean the market is overstretched and due a correction, or is a reflection of the trend strength. For now I am happy to back this as a run higher, as the trend is your friend, however I am also aware that the price is beginning to trade outside the Bollinger Bands, something which occurred just prior to sharp reversals of strong moves in August and October. This could leave gold vulnerable to some profit taking. The hourly chart has support at $1140/$1145. Also watch for possible reversal signals on the hourly momentum. Gold tends to be volatile on Non-farm Payrolls day.

Gold 05022016

WTI Oil

Somewhat unbelievably we are suddenly looking at a WTI price that is really testing the resistance of its 3 month downtrend, however once again I debate how sustainable the move is. This incredible turnaround has come simply on the back of a weaker US dollar (and not any improvement in oil price fundamentals). The big question is whether this rally should be trusted then? I still have my doubts as momentum indicators (daily RSI) still look to be calling this a bear market rally. However if the oil price can push and hold the RSI above 50, then a downtrend break is a possibility. There is still some significant overhead supply resistance in a band between $34.20/$34.80 and this is significant and now yesterday’s high at $33.60 adds to the resistance. The hourly chart shows a minor pivot level around $31.30 which if the bulls can hold on to then they will stay in near term control and begin to eye that overhead supply. Below $31.30 re-opens the psychological $30 again and the key support at $29.25. Right now though, nothing surprises me with oil with volatility still elevated. Non-farm Payrolls will only add to that today.

WTI 05022016

Original Article: Hantec Markets