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We started out today where often have lately, by looking at the US Dollar Index (DXY) and whether it could be putting in a bottoming sequence around a very pivotal big-picture spot. It will need to turn higher pretty soon to see this development take shape, but with a swing-low on the 4-hr (perhaps as soon as today) we could at least be cementing in another higher-low and see an ascending wedge come to form. For this is to happen, of course, the heavily-weighted DXY component – euro – will need to reverse lower. EURUSD is stuck between big long-term resistance around the 2012 trend-line and the April trend-line, ~11825-area of support.
US Dollar Index (DXY): 4-hr
GBPUSD put in a wicked reversal-bar on Wednesday (FOMC-day) at a cross-road of resistance at the gap-fill of the post-‘Brexit’ Friday to Monday gap. Today, Theresa May will be giving a speech on ‘Brexit’ which could help further along the reversal or negate it on a close above Wednesday’s high. A firm break below 13400 is needed to pick up downside momentum.
GBPUSD: Daily
USDJPY is at trend-line resistance running off the January high, and if the sequence we’ve seen thus far this year of turning immediately lower after rallies is to change this would be a good time for it to happen. Other USD-pairs we honed in on were AUDUSD, USDCAD, and USDCHF.
Looking to EMs,USDMXN is continuing to build the symmetrical triangle we’ve been closely watching. In line with the trend and resistance around 18, the break appears likely to come to the down-side, but being that it is symmetrical and triangles in of themselves don’t have directional biases we’ll need to wait for a break. A top-side break could just as well happen. In either case, we’ll go with the confirmed break.
USDMXN: Daily
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Yen-crosses are all still for the most part looking higher, with EURJPY, GBPJPY, and CADJPY leading the way. Other notable crosses we examined were EURAUD, GBPAUD, and EURGBP. GBPAUD is of interest from the short-side given the rejection from steadfast resistance just below 17200. EURGBP could soon arrive at a trend-line running up since November 2015 around 8740 and provide a spot from which it can bounce.
Turning to precious metals, gold is flirting with a firm breakdown below the double-tops created in April and June along with taking out a consolidation area from August in the same vicinity. A drop below 1290 opens a path of up for lower prices. Silver broke key support yesterday (now resistance) just above 17. The 16.71/50 area is next up as support. (Click here to skip ahead in the video to precious metals.) Crude oil is still sloppy, but looking higher, however; the ~51.60 level may be a point of selling interest.
Global indices remain firm for the most part, and outright bullish still in the DAX & CAC. The DAX is nearing resistance around 12676, while CAC on the other hand continues to trade on through resistance levels after a solid bull-flag breakout not long ago. The S&P 500 is still hanging tough and as long as it stays above recent highs still targeting the area between 2515 and 2530 where a pair of top-side trend-lines could come in as turning points. The FTSE is the lone bearish-looking index, with the 7300-area as strong resistance after breaking last week on the BoE. (For indices, you can skip ahead here in the video.)
For full technical considerations, please see the video above…
---Written by Paul Robinson, Market Analyst
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