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The current low-volatility environment in FX is presenting a few trading opportunities, but one needs to be very selective and lean on price levels in the absence of momentum outside of USD/CAD. We looked at EUR/USD, GBP/USD, and a few others up close, along with gold/silver levels of interest.

Technical Highlights:

  • Current trading environment calls for fading levels (for now)
  • EUR/USD, GBP/USD, USD/CAD in the spotlight
  • Gold/silver could soon turn down from resistance

For in-depth fundamental and technical analysis for your favorite market or currency, check out the newly released DailyFX Q2 Forecasts.

So far this year volatility in the FX-spectrum has been lackluster for the most part despite an upstart in equity market volatility. At some point this will change, but until it does we must continue to take what the market offers.

Fading key levels after momentum stalls will remain the primary game. Once momentum gathers pace, then we can switch gears and look for breakout-style trades, larger price objectives, and other characteristics related to a higher-vol regime.

EUR/USD, GBP/USD, USD/CAD in the spotlight

EUR/USD turned higher on Friday from support, presenting an attractive opportunity for longs. But now that we are back in the thick of the range since January, new entries don’t offer good risk/reward. Resistance remains at the 2008 trend-line in the mid-12400s. This could be another area to watch for a fade.

EUR/USD Daily Chart (Range-bound)

eurusd daily chart, range below 2008 trend-line

For the intermediate-term fundamental/technical outlook, check out the Q2 Forecast for EUR

GBP/USD has shown more life than EUR/USD lately, trading around resistance via a trend-line from January and last month’s high. At this time, looking for momentum to fade, but overall given that price action is contracting towards a triangle this year along with a still generally bullish trend, risk/reward isn’t ideal for shorts.

A turn down and hold of the lower-end of the developing triangle/November trend-line could fill out the pattern nicely for a breakout trade later-on. Just a scenario for now, but could be a good one in the not-too-distant future.

GBP/USD Daily Chart (Triangle may be forming)

gbpusd daily chart, triangle could be forming

For the intermediate-term fundamental/technical outlook, check out the Q2 Forecast for GBP

USD/CAD has been one of the few spots lately where we’ve seen considerable momentum. The 2012 slope was broken yesterday, which has the swing-low at 12451 and 2012 trend-line in focus. It’s a bit extended in the short-term, but as long as price doesn't carry back above the slope, a bounce could offer an attractive counter-trend entry.

USD/CAD Daily Chart (Broke slope, eyeing trend-line)

usdcad daily chart, 2012 slope and trend-line noted

In FX, we also looked at USD/JPY, AUD/USD, NZD/USD, EUR/JPY, GBP/JPY, CHF/JPY, AUD/JPY, NZD/JPY, GBP/NZD, AUD/NZD, along with a few others.

For the intermediate-term fundamental/technical outlook, check out the Q2 Forecast for CAD

Gold/silver could soon turn down from resistance

The tactical approach to precious metals remains the same – resistance is viewed as a spot to sell, support to buy. This will remain the case until we see a breakout take shape in gold, either above the 2013 trend-line on a weekly closing basis (currently above intra-week) or drop below 1300. Silver is very near the top of downward sloping channel and could soon present another spot for would-be sellers to jump aboard a swing lower.

Gold Daily Chart (Watch for rally to fail)

gold daily chart in range, trading around 2013 trend-line

Silver Daily Chart (Near channel resistance)

silver daily chart near channel resistance

For the intermediate-term fundamental/technical outlook, check out the Q2 Forecast for Gold

Resources for Index & Commodity Traders

Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

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