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Today, examined the US Dollar Index (DXY) and while the bounce from the long-term support zone hasn’t been the most inspiring since its one-day pop on NFPs risk still looks skewed to the top-side. This still has focused placed on bearish EURUSD and GBPUSD trades. USDJPY is trading down into support around 10900, but a risk-off environment could push it through if we don’t see buyers step back into risk assets (i.e. stocks). Many of the Yen-crosses have had very sharp declines and are in oversold territory but not inspiring price action yet to take the other side of given further risk of deterioration in risk. EURAUD broke above an upper parallel with the help of risk aversion and could see further gains in the near-term.
EURGBP has a potentially tantalizing set-up developing should we see the rising wedge formation trigger to the downside below the lower trend-line of the pattern. It could still squeeze higher, so this is a pending trade. But with the reversal-bar the other day if it does trigger a clean drop could unfold.
Gold continues to push higher and is only hours away from closing with a very strong weekly bar above the 2011 trend-line. This would be a significant develop, especially if it can break above resistance at 1296. If this happens, looking towards highs carved out in 2016 around 1375 would be reasonable. Silver is turning the corner, but doesn’t have quite the same steady technical backdrop gold does. Nevertheless, of gold goes, silver will too.
Check out the Q3 Forecasts for our take on where markets are heading.
Crude oil was rejected with force from a trend-line running down off the February peak. This has focused shifted on the lower side of the channel in place since June. Has the rally since then setting up to reverse towards another swoon lower? We should gain more clarity on that soon.
The S&P 500 is following through with force from a key reversal-bar put in earlier this week. It broke support at 2453 and a lower parallel rising up from May, putting the pressure on buyers to keep the index from swooning lower. The DAX is continuing lower in-line with the ‘head-and-shoulders’ top we’ve been tracking. Lower levels look likely with potential for bounces to sell along the way. The FTSE 100 went from nearly trading to new record highs to validating a double-top formation all in a week’s time. It still needs to break below 7300, but if it does it will be the first true lower low since 2016 and would point to a move to 7100 or worse in the near-term.
For full technical considerations, please see the video above…
---Written by Paul Robinson, Market Analyst
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