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Triangles in Dow Jones, Gold Prices, EUR/GBP Suggest Consolidation

Triangles in Dow Jones, Gold Prices, EUR/GBP Suggest Consolidation

Jeremy Wagner, CEWA-M, Head of Education


This is a recording of a US Opening Bell webinar from May 22, 2017.

In today’s US Opening Bell webinar, we discussed technical patterns on key markets. We started with Dow Jones Industrial Average and how prices appear stuck in a sideways triangle. The higher probability pattern is that we are anticipating prices to hold above 20,371 for another dip to finish the triangle later this week.

EUR/USD has screamed higher over the past week. This is indicative of a third wave price action. If so, then it implies still higher prices to come. Though we may see a temporary reaction lower near 1.13, we are anticipating higher prices towards 1.15-1.17 in the coming weeks.

Gold prices reached our initial target of $1260 last week halting a four week slide. The higher probability pattern we are following is that gold is stuck in a sideways triangle. We anticipate that when this sideways triangle finalizes, we may then see another pop above $1300. The triangle remains valid so long as prices are above $1194.

Has EUR/USD and Gold price action confused you lately? Review DailyFX’s second quarter forecast.

In reviewing EUR/GBP, it looks as though we are in a ‘c’ wave higher. We cannot rule out whether this is a ‘c’ wave of a flat or ‘c’ wave of a triangle. Two levels to watch here are .88 and .8530. A move above .88 eliminates the triangle. A move below .8530 eliminates the flat. Over the medium term, we think prices will move higher into a topping formation as the ‘c’ wave expires.

Lastly, we covered AUD/USD. Price are breaking above the red resistance trend line noted last week as sentiment has fallen into negative territory and this could make AUD/USD a late bloomer to the US Dollar correction. This was the recipe we are following that might suggest prices were ready to move up to 79 cents.

Over the past four trading days, IG Client sentiment among AUD/USD traders has fallen from +1.26 to -1.10 currently. This flip towards negative territory on sentiment coupled with a break above .7460 opens the door towards higher levels.

---Written by Jeremy Wagner, CEWA-M

Follow me on Twitter at @JWagnerFXTrader .

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.