The weekly chart for Gold is signaling a continuation of the trend as the weekly high/low is above the previous week. However, the daily chart is looking like Gold might be close to a pullback. At the same time there is possible follow-through from the bearish ascending wedge on the daily chart, mentioned last week.
Weekly
Dark purple lines on the weekly chart above identify measured moves of the first leg of the rally off the 1,532 low. If the uptrend continues and Gold can get above the 1,803 high from a month ago, then the next target is around 1,837.5 to 1,837.8, 61.8% of the first leg up taken from the recent swing low, and the 78.6% Fibonacci retracement of the full decline off the September high, respectively.
The first sign of strengthening is on a break above 1,763, last week’s high. However, resistance could be found just above there from 1,772.46 to 1,773.8, where two Fibonacci measurements meet.
You can see on the following daily chart that Gold hit resistance in the area of the downtrend line on Friday. A Doji candlestick pattern (open/close at or very close to same price) also occurred on Friday with the close being in the bottom half of the daily range. In the short-term, these are signs of slowing upward momentum.
Therefore, there’s a chance for some short-term weakening with a move through Friday’s low at 1,738.1 giving the first bearish signal. The 1,700 area is where more significant support could be found.
Daily
Crude Oil
Oil continued to advance to the upside last week after a shallow retracement off the $103.28 high hit several weeks ago. The area of the 21ema support line held during the pullback and continues to give a good indication of trend support. Keep an eye on it for support during future pullbacks. As of Friday the 21ema was at $97.80.
Daily
Oil’s price action is one of trend continuation; it’s just that the rate of ascent is slowing a bit. This is actually healthy for the uptrend given the initial steep angle off the early October bottom. Trade above $103.28 needs to occur before there is clearer confirmation that the uptrend is continuing as Oil will then reach a higher swing high.
A move above last week’s high of $101.79 gives the first signal of strengthening. Watch for resistance around $105.6, the 78.6% Fibonacci retracement of the decline off the May high.
Alternatively, a move through last week’s low of $97.24 signals weakening that could lead to a move down to at least $95.13 price area, if not lower. Weekly support below there is at $92.00. A break below $95.13 would signal a double top trend reversal if it occurs before Oil rises above $103.28.
EUR/USD
Last week this pair held the lows of the previous week and broke up out of a bullish descending wedge formation (outlined with two descending trend lines each converging towards each other). Exhaustion of selling pressure is represented by the low day which broke through the bottom trend line outlining the pattern.
Daily
Classic chart analysis indicates that a descending wedge has a reasonable chance of reversing to the beginning of the pattern structure. In this case that would be approximately 1.3788. The first indication of a possible failure (therefore bearish) is on trade below 1.3259, last week’s low.
If a failure does not occur then the first area to watch for resistance is from 1.3606 to 1.3618. This zone contains confluence of two Fibonacci measurements, and was previously daily support and resistance. Just above there is potential resistance of the 55ema, now at 1.3629.
Higher up, watch for possible resistance around 1.3689 (previous resistance), followed by 1.3729 (50% trend retracement).
S&P500 Index
Let’s start by taking a look at the underlying structure of recent price action in the S&P500 by looking at the weekly chart. Back in early August the Index broke down through the neckline of a head and shoulders top. It subsequently retraced back to neckline resistance, breaking through it a bit before finding resistance just shy of the 78.6% Fibonacci retracement of the decline from the right shoulder.
Another decline followed from there with support found in the area of the 61.8% Fibonacci retracement of uptrend beginning in early October. Last week a strong rally ensued with the cash S&P500 up over 7% and futures improving around 6%.
Weekly
By Friday upside momentum had diminished with the S&P500 closing near the low of the day. Short-term this is bearish behavior. Also, resistance on Friday was found in the area of the 78.6% Fibonacci retracement level of the downtrend begun from the late October high. Together, this indicates that’s there’s a fairly good chance that the Index could see a pullback from here and consolidation of gains.
Daily
Assuming the Index doesn’t break above last week’s high of 1,263.4, a minimum retracement down to at least the 38.2% Fibonacci level of the current rally around 1,219.62 is likely. The significance of this price area is strengthened as it was hit multiple times as daily support or resistance in the past (see arrows).
Below there, the next area to watch for support is around 1,206, the 50% Fibonacci retracement level, which was also daily resistance during the rally.
For further details please contact: Bruce Powers, CMT
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Head of Research & Analysis Trust Securities Dubai, United Arab Emirates
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