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The US dollar rallied this week and ended the month with gains against the majority of its most-traded peers as speculations about potential quantitative easing tampering in September continued to push the currency up.
As was expected, the dollar was unsure where to go at the start of the week and was unable to maintain rally. Yet it quickly found a reason to resume its advance: a potential war in Syria. Of course, positive domestic fundamentals also played in favor of the US currency, increasing likelihood of QE reduction next month. Concerns about Syria eased by the weekend, but this did not prevent the greenback from retaining gains.
USD was trading sideways versus EUR as the week began, but dropped sharply in the second half. The currency’s movement against GDP was more straightforward as it was rising for almost the whole week. USD demonstrated different performance versus JPY as it plunged on Tuesday and was attempting to rally for the rest of week. USD/JPY ended the week with relatively small loss, but loss nonetheless.
EUR/USD sank from 1.3382 to 1.3215 over the week. GBP/USD was down from 1.5562 to 1.5495, while its weekly low was at 1.5426. USD/JPY slid from 98.54 to 96.81, but bounced to close at 98.16.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.
Fundamental Forecast for Euro: Neutral
The Euro was the second to worst performer on the week, outgaining the Australian Dollar by a mere +0.24%. With risk-aversion gripping the globe amid rising tensions between the United States and Syria, the traditional “safe havens” found their place as the top performing currencies covered by DailyFX Research. The EURUSD dropped by -1.21% to close the week at $1.3220; and the EURJPY eased by -1.78% to ¥129.80.
Declines haunted the single currency as further signs of improved growth prospects in the region failed to attract buyers. Considering that the Euro has remained elevated for the past several weeks but has thus far struggled amid stronger data, it appears that the Euro – and Europe on the whole – has become a short-term safe haven from plunging emerging markets.
While the emerging market fears aren’t going to go away anytime soon, it’s clear that the risk to the Euro is weighted to the downside: strong data is failing to inspire further gains; and even slightly disappointing news is attracting sellers more commonly. This week, with the first revision to the 2Q’13 Euro-Zone GDP report due and no change in the report figures (+0.3% q/q expected unch; -0.7% y/y expected unch), it is unlikely the Euro sees a boost on the organic-data side of the equation.
This secondary theme – that the Euro isn’t rallying on signs of a broader recovery – will exhibit itself multiple times throughout the week amid the final August PMI readings due for the Euro-Zone’s major economies. Like in the case of the GDP figure on Wednesday, these data, despite their positive inclinations, will do little to spur upside momentum.
Indeed, there are two headline themes this week, one at home and one abroad for the Euro. On Thursday, domestic issues come front and center when the European Central Bank will unveil its latest policy decision. A hold is expected all around, with the main rate at 0.50% and the deposit facility rate at 0.00% – duly no cut to a negative interest rate. However, the first theme – the intensity of ECB President Mario Draghi’s discussion on inflation and credit growth – could prove to be a negative influence on the Euro.
The ECB, like most central banks in developed economies, relies on inflation as a temperature reading of economic activity; and when the thermometer is at +2% yearly, that’s when the ECB finds its polices are working best. When inflation is at +2% yearly, economic growth is moderate, but not too fast to spur runaway prices; and moderate inflation means the central bank can keep interest rates lower to support credit growth. That is why this past week’s round of inflation data is so concerning for the Euro, notes Currency Strategist Ilya Spivak.
I agree with my colleague but I think the implications are more geared towards credit growth rather than inflation; Germany, after all, despises inflation and is certainly cheerful that hyperinflationist fears haven’t manifested themselves amid seemingly endless monetary easing.
Credit growth was a main concern for ECB President Draghi at the last post-meeting press conference, despite signs that growth had turned higher (it has, and credit growth remains weak). Indeed, a look at Euro-Zone excess liquidity shows that capital levels have fallen back to pre-LTRO1 levels, which of course precipitated liquidity injections totaling over €1 trillion beginning between December 21, 2011 and February 29, 2012. So, while the ECB may not want to cut rates again given the near-term pick-up in growth prospects, it may be thinking about implementing another liquidity injection to help spur credit growth (which would hurt the Euro).
While the ECB addresses credit growth, the US labor market report – the hallowed NFPs – will guide the US Dollar. Ultimately, when all is said and done, the US Dollar will guide the Euro. Given the sensitivity of markets to September taper talk, forex traders will likely find that this Friday’s US NFP report will upend the Euro – quite possibly violently in either way depending upon the print. –CV
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The Canadian dollar rose against the euro and ended the last trading day of this week almost flat versus the US dollar and the Japanese yen even though Canadian economy shrank more than was predicted by experts.
Canadian gross domestic product shrank 0.5 percent in the second quarter of 2013, more than was predicted (0.4 percent). GDP expanded 0.2 percent in the first quarter. The data suggested that it is too early for the Bank of Canada to consider raising interest rates.
Still, the loonie managed to register gains as risk aversion eased after chances for a US attack on Syria decreased. Britain and France refused to join conflict until UN survey confirms that chemical weapons were indeed used by the Middle Eastern country last week.
EUR/CAD slipped from 1.3942 to close at 1.3913. USD/CAD ended Friday little-changed at 1.0527. CAD/JPY was down a little from 93.34 to 93.22.
If you have any questions, comments or opinions regarding the Canadian Dollar,
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The economic docket is fully stocked next week, and it should provide exceptional volatility. Be wary of those pairs in the direct line of site to the data. There is at least one piece of major event risk for each of the major currencies – NFPs (USD), RBA Rate Decision and Aussie GDP (AUD), ECB Rate Decision (EUR), BoE Rate Decision (GBP), BoJ Rate Decision (JPY), BoC Rate Decision (CAD).
New to the mix, we have added “Macro Trend Trading with Currency Baskets” with Ilya Spivak. Stock, futures and options traders who prefer to “invest” (long-term) rather than “trade” (short-term) will find the forex trading techniques in this webinar easily transferable to other investing activities.
Top event risk – and thereby our DailyFX-Plus event – this week is theUS Nonfarm Payrolls (NFPS). Given we are less than three weeks away from the Fed’s September rate decision where the market heavily expects the ‘Septaper’, this is a particularly important last-minute indicator to take in and can thereby be very important in influencing trading for the Dollar, equities and global markets.
Read more: Forex Volatility Almost Guaranteed on Huge Week of Currencies
Trade the News Live with DailyFX(Link)
- Tues (Sep 3, 04:30 GMT) – RBA Rate Decision withIlya Spivak, Currency Strategist
- Wed (Sep 4, 01:30 GMT) – Australia GDP (2Q) withJohn Kicklighter, Chief Strategist
- Thur (Sep 5, 11:00 GMT) – BoE Rate Decision with Christopher Vecchio, Currency Analyst
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- Tues (Sep 3, 10:00 GMT) – Trading Q&A with Christopher Vecchio, Currency Analyst
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- Tues (Sep 3, 23:00 GMT) – Trading Q&A with John Kicklighter, Chief Strategist
- Wed (Sep 4, 15:30 GMT) – Trading Q&A with David Song, Currency Analyst
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- Fri (Sep 6, 00:30 GMT) – Trading Q&A with Ilya Spivak, Currency Strategist
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The Great Britain ended the month with the biggest gain against the euro in a year as the sterling continued to rise on improving consumer sentiment and increasing house prices. The UK currency ended Friday flat versus the US dollar and closed with a small loss against the Japanese yen.
The GfK UK Consumer Confidence Index increased by three points to -13 in August. The report said:
As more and more official figures show that we are all worse off, with UK living standards at their lowest for a decade, the British public’s economic confidence continues to grow strongly – a conundrum of Alice in Wonderland proportions.
The Nationwide house price index rose 0.6 percent in August after advancing 0.9 percent in the prior month.
Macroeconomic data continues to confirm that the UK economy stands firmly on the path to recovery. This is not necessary favorable for the currency, as some analysts point out, because the recovery is already priced in and without any major positive surprises the sterling’s rally is going to lose momentum.
EUR/GBP fell from 0.8538 to close at 0.8527 today. Meanwhile, GBP/USD closed at 1.5495 after opening at 1.5502 and GBP/JPY slipped from 152.45 to 152.11.
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Article Summary: It’s easy to see a big move and want to jump in so that you don’t miss the next trend. However, there is a specific candlestick pattern that you can keep an eye on to make sure that you’re not entering on an exhausted move.
“The first principle is that you must not fool yourself and you are the easiest person to fool.”
Richard P. Feynman
Once you’ve been in the markets for a long enough period, you see that what goes up, can just as quickly also go down. However, there are a few things you can keep an eye on to make sure that you’re not chasing a big move or entering as price enters near resistance or selling right upon support.
Using Candlesticks & Trendlines to Spot False Breakouts
As the quote above warns, when trading, the easiest person to fool is often yourself. The reason for this seems to be that when chasing a specific return, traders can end up forcing set-ups that aren’t really there. Naturally, this can be fatal to the survival of your account but there is a form of market analysis that can help you see whether a pending set-up still has room to run or is likely to fade away.
If you don’t feel like you have a comfortable grasp on trading with candlestick, we’ve created a FREE 20-Minute course here to about the basics of price action and how to use the clues the market is providing to place trades.
When the Market Is Giving You a Yellow Light
Candlesticks can be used at key technical levels to ensure you’re not running into the trade with your fist full of cash just as everyone else is leaving the trade or flipping their position. The easy way to see if the trade or set-up doesn’t have the conviction necessary to put your money at risk is through the wick. A long wick shows us that the close took placa good distance away from the high or low and shows a lack conviction on that price extension.
Confirming a Technical Pattern Extreme with Candlestick Wicks
LEARN FOREX: XAUUSD Showed a Large Upside Wick or Shooting Star at Resistance
Presented by FXCM’s Marketscope Charts
When price comes up to a level of support or resistance, a lot of traders are eager to enter the breakout. However, false breakouts occur and it’s helpful to see false breakouts in real time. Below are a few examples of when traders were not able to hold price past an extreme such as a trendline or the Relative Strength Index and then you will see a long wick against the extreme.
LEARN FOREX: Multiple Levels of Resistance on EURAUD Confirmed With A Long Upside Wick
Presented by FXCM’s Marketscope Charts
Another example of a long wick against a few extremes is taking place with RSI. As you can see above there is declining RSI into higher price highs which shows bearish divergence along with the horizontal line at a significant price level on 1.5000 and finally large rising wedge. These three forms of resistance are met with a large upside wick which means the conviction wasn’t there as a whole and we could see a move down.
When a Breakout Is Truly a Breakout
There are a handful of ways to tell when a clean break of resistance could have some follow through. Instead of seeing a wick through a level of resistance followed by a move back down, a strong candle through resistance with a close above it strong signal that the move could continue. By looking for a Strong candle body through a key level, you can see that conviction may very well carry though.
Learn Forex: Resistance Became Support on GBPUSD As a Large Candle Broke Through
Presented by FXCM’s Marketscope Charts
The price action on GBPUSD is very convincing. In other words the heavy level of resistance at 1.5410 was broken through on a news break with a strong candle which shifted GBPUSD into a position of strength. After that clean break, the 1.5410 level of resistance turned into a floor as price pushed higher.
LEARN Forex: Strong Candle Break Shows USDOLLAR Correction Could Be Finished
Presented by FXCM’s Marketscope Charts
Closing Thoughts
The body of a candle is a great way to see if a breakout has conviction or not. If key technical support or resistance only has a candle wick through it and the close of the candle is relatively far away from the resistance or support, you can see that as a market that has likely exhausted itself upon the move and may turn lower. However, a big candle body through that key level shows you that there may be room to run and that you can look to that broken level as a place to look for entries or to set your stops around in the future.
Happy Trading!
—Written by Tyler Yell, Trading Instructor
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EURUSD dropped yesterday and closed at 1.3239. Data released from the United States indicated that the Unemployment Claims dropped to 331,000 during the last week. Another official data released yesterday showed that grew 2.5 percent in the second quarter of 2013. The Unemployment Rate in Germany remained at 6.8 percent in August. In a release today data showed that the Unemployment Rate in the Eurozone remained at 12.1 percent in July. Support for the EURUSD is seen at 1.3223 and resistance is seen at 1.3305. The HotForex Traders Board shows that 51 percent of the traders are long on the EURUSD.
GBPUSD
The Cable dropped yesterday and closed at 1.5502. A report released today showed that the GfK Consumer Confidence in the United Kingdom rose to -13 in August. The Nationwide House Price Index came out in line with the market expectation at 0.6 percent in August. The Net Lending to Individuals month over month data released today dropped to 1.3 billion Sterling in July. Support for the GBPUSD is seen at 1.5448 and resistance is seen at 1.5553. The HotForex Traders Board shows that 56 percent of the traders are long on the GBPUSD.
Talking Points:
- US consumers better off than previously estimated.
-Confidence below July level, in line with rising interest rates.
- EURUSD BEARISH
The US Dollar has seen a kick higher this morning amid signs that US consumers are weathering the recent patch of softer economic activity. The final U. of Michigan Consumer Confidence survey for the month of August ticked slightly higher to 82.1, but remained the previous month (and yearly high) of 85.1.
Here are the figures driving US Dollar price action:
- U. of Michigan Confidence (AUG F): 82.1 versus 80.5 expected (initial 80.0), prior 85.1.
From earlier today, these data proved to be a bit of a drag on the US Dollar as US Treasury yields slipped:
- Personal Income (JUL): +0.1% versus +0.2% expected, from +0.3% (m/m)
- Personal Spending (JUL): +0.1% versus +0.3% expected, from +0.6% (revised lower from +0.5%) (m/m)
- PCE Core (JUL): +1.2% versus +1.3% expected, from +1.2% (y/y)
Read more: Euro Lacks Direction amid Improved Labor Data; GBP Best in August
EURUSD 1-minute Chart: August 30, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Nevertheless, despite mixed/softer secondary US Data earlier in the day, the US Dollar now finds itself sitting at or near session highs against most of its major counterparts as forex traders rebalanced their books at the end of the month.
The EURUSD slipped from near $1.3220 ahead of the release to as low as 1.3202. At the time this report was written, the EURUSD was trading at 1.3205.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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View Live Chart for the EUR/USD
Despite slightly disappointing US data, the greenback maintains its strength across the board, accelerating against the EUR, with the pair testing recent lows around 1.3220. The pair has been trading in a quite limited range this Friday, capped below 1.3254 daily high. The hourly chart shows price below 20 SMA and indicators heading lower, supporting a soon test of the 1.3180 static support level; 4 hours chart shows indicators still heading south despite in oversold territory, which supports the shorter term view.
Support levels: 1.3180 1.3140 1.3100
Resistance levels: 1.3250 1.3300 1.3345
View Live Chart for the GBP/USD
The GBP/USD trades also lower in range, approaching its daily low ahead of US opening, and with the hourly chart showing a slightly bearish tone, with price finding short term resistance in a flat 20 SMA and indicators heading lower below their midlines. In the 4 hours chart the distance in between 20 SMA and 200 EMA continues to shrink, with both indicators containing price; however, the downside is still favored as per indicators heading lower below their midlines and current dollar strength.
Support levels: 1.5445 1.5400 1.5360
Resistance levels: 1.5520 1.5550 1.5595
View Live Chart for the USD/JPY
Technical picture in the USD/JPY remains unchanged, with price holding right above its moving averages in the hourly chart and indicators standing around their midlines, lacking clear direction at the time being. Risk to the downside increases with local share markets in red, and US indexes pointing for a negative opening: break of the daily low around 97.90 is required to confirm further slides today, down towards 97.00/20 price zone.
Support levels: 97.90 97.50 97.20
Resistance levels: 98.50 98.85 99.20
View Live Chart for the AUD/USD
The AUD/USD also found no reasons to move far away, with technical readings presenting a quite neutral stance in the hourly chart. An attempt of recovery remained limited by 0.8930, but the pair held above the weekly low of 0.8891. 4 hours chart shows price barely below 20 SMA and indicators flat around their midlines, giving no clues on direction either. Being the last trading day of the month, some profit taking may affect the market and reverse latest greenback gains, but if stocks remain under pressure, the movement should be limited.
Support levels: 0.8910 0.8885 0.8840
Resistance levels: 0.8935 0.8980 0.9020
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EURUSD: This pair has moved downwards by more than 150 pips this week. It is trading below the resistance line of 1.3250, the next price target may be the support line at 1.3200. It should be noted that the resistance line at 1.3300 is a serious barrier to any bullish threats.
USDCHF: USDCHF has gone upwards this week. it moved upwards by over 100 pips, the next resistance level to be breached is 0.9350. Meanwhile, the support level at 0.9250 is expected to be a check for any bearish pullbacks along the way. The fact that the Williams’ % Range is in the overbought area suggests possible bearish breaks.
GBPUSD: This market, which is in an equilibrium phase, has also remained the bearish market. This means that the equilibrium phase is a type that allows some movement to the downside. The Bearish Confirmation Pattern in the chart means that the price could fall downwards further, towards the accumulation territory of 1.5400.
USDJPY: This market is not attractive right now because of the recent signals that are short-lived rather than sustained. This week, the loss the market experienced has been recovered by the current bullish attempt. There are no safe signals in the chart now and it looks logical to wait for a clearer direction before taking any position.
EURJPY: There has been a consolidation to the downside in this cross. In spite of the recent sideways movement and bullish attempt, the bearish outlook remains a valid thing. In the chart, it can be seen that the price has been trending downwards, reaching out towards the demand zone at 129.50.
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The Norwegian krone fell today as a set of negative reports was released today by Statistics Norway, making the nation’s currency less attractive to traders who prefer to avoid risky assets due to the poor market sentiment.
Norwegian retail sales dropped as much as 1.3 percent in July from June, when the decrease was by just 0.2 percent. Household consumption of goods slumped 2 percent last month from a month ago. The employment data looked not that bad, but it did not help the currency much.
USD/NOK rose from 6.0912 to 6.1139 as of 11:48 GMT today.
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GBP/USD Technical Analysis
Confirm your chart-based trade setups with the Technical Analyzer.
Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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AUD/USD Elliott Wave
Since our last analysis the AUDUSD pair has been trading downwards, corrective wave B (coloured black) of the bigger wave .A (coloured green) has been developing. Yesterday, during the Asian and European sessions we could observe strong descending movement from 0.8977 towards the 0.8920 level. Therefore, during the New York session this major currency continued trading in bearish mood and the price reached a new daily low at the 0.8900 level. We can consider this move as the end of the B wave (coloured black). At the moment, the AUDUSD pair is trading around 0.8935 and we are expecting to see the price move higher in the next few sessions. In accordance with our wave rules and taking into account that wave C should retrace 100% of wave A, we can define the potential targets with measuring wave A with take profit at 0.9020 (100% of wave A). To reduce the risk, we can use invalidation point at 0.8900 level as stop loss.
Support and Resistance
(S3) 0.8840, (S2) 0.8878, (S1) 0.8903, (PP) 0.8941, (R1) 0.8966, (R2) 0.9004, (R3) 0.9029.
Trading forecast
Proceeding from Elliott Wave rules today, the trend is expected to begin upward movement. That is why long potions at the level of 0.8950 with stop loss at 0.8900 and take profit at 0.9020 are recommended.
Nicola Delic is taking part in the “Analyst of the Year” award organized by MT5.com portal. If you like his article, please vote for him.
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Performed by Nicola Delic, Analytical expert InstaForex Group © 2007-2013 |
Talking Points:
Dollar Clears Resistance with EURUSD Breakout but Fear Trade Cooling
Having spent the past two weeks within a narrow band of congestion, the dollar finally made a move higher this past session. Yet, a trend requires much more than just a breakout to take root. And, given the recent balance in risk-sensitive capital markets along with the acclimatization to the high probability of a September Taper, the greenback already looks as if it is lacking for drive. Taking stock of the dollar’s performance, the Dow Jones FXCM Dollar Index overtook a stubborn range of resistance around 10,760. That move was derived from the EURUSD’s biggest drop since May 9 and a universal advance for the dollar against all of its major counterparts. From the docket, we can draw an anecdotal relationship between the substantial upgrade to the US 2Q GDP reading (2.5 percent from a 1.7 percent flash reading) and a greater probability for the Federal Reserve to reduce its monthly stimulus effort three weeks from now. That said, the market already seemed appreciably certain of such an outcome prior to this data. The same is true for Richmond Fed President Lacker’s (a non-voter) remark that all the conditions for the Taper had been met. If the dollar is to establish a durable and universal bull trend, we must tap an undervalued element of its backdrop – an unrivaled liquidity currency. A technical cue would be an S&P 500 drop below 1,625, but there are few clear fundamental sparks.
Japanese Yen: Strong Inflation and Employment Data Doesn’t Help BoJ
Japan’s economic docket was loaded Friday morning with event risk that represents a comprehensive view of Japan’s health and more importantly the success of the Bank of Japan’s (BoJ) stimulus effort. The list of indicators presented an impressive view of the country’s progress, but it would also undermine the central bank’s implicit effort to see its currency lower. Highlights from the data deluge were the 3.8 percent unemployment rate (the lowest in October 2008) and 0.7 percent annual inflation growth (the highest since November 2008). Strong growth and building price pressures curb the need for further stimulus. That limits the counterbalance to any carry unwind that arises.
Euro Drops as IMF Says No Third Greek Cash Injection Underway
After the Swiss franc, the euro was the weakest of the majors Thursday. There was plenty of fundamental fodder for FX traders to draw from in order to establish their positions, but the headlines would ultimately do little to the action on the day. While Germany reported an unexpected increase in unemployment, ECB member Weidmann’s call to end preferential treatment on sovereign debt and the IMF remarking that it was not laying out a new round of Greek aid; the region’s equity markets closed higher and yield lower. This was more likely EURUSD guidance.
US Oil Collapses 4 Percent from Highs as Syria Intervention Pressure Cools
US crude prices rallied as much as 5.5 percent since the start of the week; but heading into Friday’s session, the commodity is little changed from Monday. There was a sharp reversal in the benchmark futures contract through Wednesday just after setting a more-than-two-year high above $112, and that correction was extended through Thursday. The initial swell in the market was driven by fears of Middle East instability originating in Syria. On claims that the Syrian government used chemical weapons on rebels, the United States and other Western powers have been on a path to intervene. Yet, that momentum would flag this past session and deflate the ‘fear’ bid. Particularly disarming was the UK’s House of Commons vote (285 to 272) against Britain’s support in an engagement. However, this development does not preclude the United States and others from action. Should the situation heat up again, fears of a pinch in the oil supply can easily drive prices back up.
Canadian Dollar Gains on US Growth, How Will it Do On its Own 2Q GDP Reading?
Where risk trends were neutralized, the Canadian dollar was showing gains against counterparts this past session. On the local docket, the 2Q current account deficit of C$14.6 billion was modestly smaller than expected but otherwise offered little speculative risk impact. Instead, are larger implications through the data from the country’s largest trade partner. The upgrade to the United States’ initial reading of 2Q GDP presents its neighbor with a source of stronger export demand. Another headline that drew FX trader appeal was an economist poll from Reuters which projected a Bank of Canada rate hike by the final quarter of 2014. Heading into the final 24 hours, a short-term volatility boost is possible with June and 2Q Canadian GDP figures. There isn’t a strong history of volatility, but the data can help set trend.
Emerging Markets at Risk of Another Burst of Volatility with 2Q GDP Data
Emerging market currencies from the Indian Rupee to Brazilian real stabilized this past session. Monetary policy officials in these countries are no doubt letting out a sigh of relief, but there is limited scope to count this as a certain ‘return to normal’. The trouble for the developing economies is the outflow of investor capital that is driven by a global sense of exposure to low-yielding and high-risk assets. As long as the market is looking to ‘deleverage’, this class of economy and currency will find itself under pressure. That being said, the rebound in US and European equities along with the jump in carry trade Thursday helped stabilize pairs like USDINR – more than the Reserve Bank of India’s pledge to provide dollars to its three largest oil companies. It is a delicate balance however that depends on general ‘risk trends’. Should traditional risk assets stumble, USDINR can easily be driven to 70. However, anotherasymmetrical event risk lies ahead as well: Brazilian and Indian 2Q GDP. Strong readings will be limited as the market will be distracted. A disappointment though can light another fire.
Gold Ends Bull Run Below $1,425 as Coordinated Risk Eases, Dollar Gains
Gold’s technical rally has finally come to a close. Having slipped from impressive 3.7 percent, five-day run (matching the longest series of gains in exactly 12 months), the metal is still trading above $1,400. Now the question is how far this change in tide will be. Will the move prove only as shallow as the Thursday’s 0.7 percent correction, or will the panic that drove the commodity’s 10-month collapse return to instigate the next structural bear leg? For immediate comparison to the last time we called a close to a 5-day run (April 22), the 5.8 percent advance resulted in only a single day retreat before returning to its run. The comparison between now and April are only superficial however. The previous rebound occurred after the massive 15 percent plunge below $1,500. The current series is the peak on a two-month climb. Once again, what matters are the fundamentals. Gold’s role as an alternative to traditional currencies, an inflation hedge and harbor during financial instability are all on uneven ground. With the dollar rising and market’s Syria concerns easing, the market has downgraded the metal’s two active drivers.
**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar
ECONOMIC DATA
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SUPPORT AND RESISTANCE LEVELS
To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal
To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table
CLASSIC SUPPORT AND RESISTANCE
INTRA-DAY PROBABILITY BANDS 18:00 GMT
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— Written by: John Kicklighter, Chief Strategist for DailyFX.com
To contact John, email jkicklighter@dailyfx.com. Follow me on twitter at http://www.twitter.com/JohnKicklighter
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