The Euro broke out last week and on that it looked ready to finally make a one-way move, but with it falling back down inside the multi-week trading range the risk is more choppiness, if not possibly the beginning of an outright decline. The DAX gapped higher this morning into resistance and is struggling; still leaning short-term bearish. Gold’s consolidation looks likely to come to an end soon, waiting for a breakout for directional cues.
Technical Highlights:
- EUR/USD recent breakout is failing
- DAX up against solid resistance, risk is lower
- Gold’ short-term range set to end soon
See where our team of analysts see your favorite markets and currencies headed in the months ahead on in the Q1 Trading Forecasts.
EUR/USD recent breakout is failing
Last week we were discussing the Euro breakout and the likelihood of rising volatility in the single-currency. The breakout is currently failing but the rise in volatility is still on the table as Euro one-year vol of vol contracting points to a significant move coming soon.
For now, EUR/USD is moving back inside the range it has built since late October. The breakout and drop back inside could soon lead to a move through the other side of the range, leading to an extended move; but we will need to be patient now before running with any real trading bias. Trading amongst choppy price action is least ideal for those seeking momentum.
EUR/USD Daily Chart (Back inside range)
Check out the recently released Q1 Euro Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
DAX up against solid resistance, risk is lower
The German benchmark gapped higher this morning, but quickly turned lower after the open. The turn down came from an area of resistance that will be difficult for the DAX to trade through. The trading bias is lower for now, with the area close to 10600 eyed as potential support.
DAX Daily Chart (Turn off resistance)
Check out the recently released Q1 Equities Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
Gold’ short-term range set to end soon
Gold is consolidating following its break above a multi-month channel line. The congestion is taking the shape of a symmetrical wedge, most visible on the 4-hr time-frame. A breakout to the topside will quickly have the 1305/10 area in focus as resistance from last year. It’s a strong area given the number of inflection points, so it should be treated with caution if long, but if can break through there will be room to run.
On the downside, a break will have the upper parallel of the channel in focus as support. Shorts will want to pay attention to whether buyers show up at that threshold or not. A break below will likely lead to further downside momentum towards the 200-day at 1248.
Check out the recently released Q1 Gold Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
Gold Daily Chart (Slope support, price resistance)
Gold 4-hr Chart (Symmetrical triangle)
Resources for Forex & CFD 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
You can follow Paul on Twitter at @PaulRobinsonFX
