Key Economic Data - Coming Up Today(All Times GMT+3)
The EURUSD rose yesterday from 1.2420 up to 1.2508 before falling again to a current price of 1.2441. Markets were very volatile yesterday as Gold and Crude Oil fought back to post strong advances against the US Dollar. After falling $60 since Friday Gold stormed back rising $78 to $1221.08 and 6.5% in a single day in what was an incredible turnaround. Crude Oil spiked higher rising from $63.75 to $69.55 rising $5.80 up 9% from low to high in a single day. Sunday's rejection of the Swiss Gold referendum initially saw Gold sell off to $1142 before buyer took control of the market. Economic data out in the US yesterday showed the US Final Manufacturing PMI come in at 54.8 just below expectations while the ISM Manufacturing PMI exceeded forecasts at 58.7. Overnight in Australia the Cash Rate was kept unchanged by the Central Bank while Building Approvals soared to 11.4% helping the AUDUSD rise to 0.8543. The USDJPY which made a new high at 119.14 yesterday and sold off sharply falling to 117.87 has since recovered and is now trading at 118.89. For the EURUSD the pair broke the 1.2444 level but has held above the next support line at 1.2402 leaving the technical picture mixed. Holding above 1.2402 could open up the way to a rebound while a break below this level to the downside this will signal an increased possibility that the price will cave in and make new lows. A potential break below 1.2357 will create new yearly and two-yearly lows and could lead to margin calls and euro selling that will force the pair within reach of the 1.2000 level. This is particularly the case given that we are coming into the last month of the year and new lows will push longs into an uncomfortable position. The US DJIA closed at 17,776 after flat lining around the all-time highs at 17,830.
The RSI on the EURUSD Weekly Chart has crossed back above 30 following volatility round the 30 figure. Readings of 30 and below on the RSI are considered oversold and this could raise the possibility of a near term recovery in the pair. The next move will be to see if the RSI stabilizes and moves higher or if it will fall back towards the reading of 15 made in September this year. The EURUSD has declined for each of the last 5 months and opened for December at 1.2437. Any close above this level for December will break the run before it turns six consecutive months.
At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel as seen in the H4. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish. - This has been our consistent outlook for three months. The pair has been below the key 1.30 level for eight consecutive weeks. To change the trend the EURUSD must consolidate above 1.2500 and rise above 1.2883 raising the prospects of a near term upside correction in the pair following months of declines. Last week's second consecutive weekly close below 1.2500 after holding above this level for most of the week sent a bearish signal to investors.
EURUSD Support areas include 1.2358, 1.2335, 1.2300, 1.2200, 1.2150. Resistance levels above are at 1.2600, 1.2700, 1.2845, 1.2800, 1.2900 & 1.30.
EURUSD 5 Minute Chart
EURUSD 4 Hour Chart
EURUSD Pivot Point Table
Gold made its largest daily move of all of 2014 to date as seen in the Daily chart. The $80 fluctuation from $1143-$1221 could prove to be a turning point for Gold as the market bounced higher on bad news. There is a wise trading proverb which says if a market does not decline on bad new it is a bullish signal and even more bullish if the market rises on bad news. The move also opened up a new high for the recent three week rally. The previous high had been at $1208 and now the new marker is set at $1221.08. The reaction to the Swiss Gold Referendum was spectacular and caught many traders by surprise as the prevalent idea had been that if the vote is no the price of Gold will decline and if the vote was yes the price will rise. Gold had three weeks of consecutive gains before this was interrupted by last week's decline and the trend is now set for a resumption of the Gold recovery. It will be very important to see if Gold can post a winning week for this week and also Gold needs a yearly close above $1205 to be higher for the year. Gold this week opened at $1159.50 a full $40 lower than it had opened the last week at $1201.50 an ounce . The failure to close above $1200 last week is bearish, to the downside the $1180 support followed by $1174, $1145 and $1130 are all back in play level. Silver now is trading at $16.20.
December will be key to determining if Gold can recover up above $1200 and continue to erase some of this years losses. Gold opened the year at $1205 an ounce and therefore is only 2% down for the year. In the early months of this year Gold had advanced as high as $1388 an ounce and as such is $200 off the yearly highs for 2014. With a just over a month until the end of this year it is integral to see if Gold closes higher or lower than the Jan 1st 2014 level. Between 1999 and 2013 for 14 consecutive years the price rose year to year. In 2013 the price opened the year at $1674 and closed at $1205 posting a first yearly loss in 15 years. Therefore it is key to see if the year to year loss extends into a second year of if Gold can shrug of 2013 as a bad year and recover back up towards the 2011 all-time high of $1921.
Gold prices have fallen from $1345 an ounce in August to as low as $1130 in November, erasing $215 from the value of Gold. The $1180 area remains the key to a recovery in Gold which is down from above $1900 in 2011. Gold had advanced from $245 an ounce in 1999 to $1921 in 2011 posting 12 years of straight gains. Now the market has leveled off. Now the price is above $1180 the odds of a recovery are improved, if the price slips below $1180 the outlook turns bearish.
Support levels for Gold can be seen at $1180, $1160 $1140, $1130, $1125, $1115, $1100. Resistance to the upside materializes at $1195, $1205, $1215, $1225, $1235, $1240.
Gold 5 Minute Chart
Gold 4 Hour Chart
Gold Daily Chart
Gold Pivot Point Table