Key Economic Data - Coming Up Today(All Times GMT+3)
The EURUSD has moved off the lows and has continued higher now trading at 1.2433. The pair is barely 0.5% above the two year low at 1.2357 and is vulnerable to making new lower lows on the back of any poor Euro economic data or strong US economic data. After declining from a high of 1.26 last week to 1.2358 the pair has now pushed above 1.24 will reach the midpoint of this range at 1.2475. A move above 1.2475 and then above 1.2535 will re-ignite hopes of a rebound in the Euro following months of downside momentum. A break below 1.2357 will extend this year's downtrend and likely see 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. This latest decline in the pair after another failed break out attempt occurred after ECB President Mario Draghi commented on the weak inflation in Europe and the need to reverse this trend by stimulating aggregate demand and an inflation rate within the target of the ECB mandate. Last week's weekly close below 1.2500 after holding above this level for most of the week sent a bearish signal to investors. 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. WTI Crude Oil is trading above $75 for the fifth consecutive day and is currently trading at $75.77 a barrel after rising as high as $77. The US DJIA is trading at all-time highs above 17,800 and the USDJPY has reached as high as 118.55 and after failing to break the high at 119, fell to 117.70.
The RSI on the EURUSD Weekly Chart has crossed back below 30 and appear to have failed in its latest attempt to push above 30. 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 4 months and at 1.2433 is down for a fifth month in November also.
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.
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
After setting a three week high at $1208 on Friday Gold opened the new week above $1200 an ounce. The range this week has held between $1192.80 and $1204.25, in what is a narrow range for Gold and equates to 1% of the price of Gold from high to low. The price is currently at $1202 and is targeting a move above $1204 followed by $1208 and new four week high above $1232. To the downside $1180 is an important support followed by $1174, $1145 and $1130. Gold has been benefiting recently as new legislation being discussed in Switzerland that will result in a partially Gold backed Swiss Franc. The potential of such a development happening and being mimicked by other countries could stoke demand for Gold. Accomodative monetary policy in Europe, Japan and China, where new easing and stimulus have been announced has created more demand for Gold due to the perceived lose of value that these currencies will suffer due to the increase in the money stock. At the same time the US maintains a careful and gradual tightening of monetary and fiscal policy as the global economy remains fragile. Despite this the Gold trade is being weighed down by a market prognosis of strong recovery in the US, the resurgence of a strong USD and the expected normalization in US interest rates.
The next month and a half 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 Pivot Point Table