The pair has retraced to the 50% Fibonacci level after bears broke below the 0.6700 support line, creating a neckline for a potential head and shoulders. A reversal signal here would see more aggressive traders sell the pair in anticipation of the right shoulder being formed. A break below 0.6740, will see bears defend this area as they push for 0.6715, 0.6700 and 0.6680 to complete the head and shoulders. Resistance is at 0.6760 with 0.67768 and the 0.6800 handle up ahead.
The pair has failed to break below the 1.4860 support zone and is in consolidation since volatility exited the market in late afternoon trading on Friday. Currently the down slope and 1.4925 resistance level is being tested and if it holds we would expect bears to try for 1.4900 and then 1.4860 as they attempt to close the week below last weeks lows. However, with over 360 pips lost last week, we might see some profit taking before the trend continues. A close above 1.4925 would ensure a higher move to 1.4960 and a retest of the 1.5000 handle.
The pair managed to retest 1.0800 after making a high at 1.1060, and saw satisfied short term bears take some profits as the pair trades 80 pips higher. A close above 1.0880 will see significant resistance at 1.0930-40 level being retested at which point bears are expect to re-enter the market and retest 1.0800 and beyond to 1.0750 and 1.0700 if successful. A break above 1.0880 will ignite the drive to the 1.0930-40 resistance zone with 1.0950 and 1.1000 expected to hold strong, if price does manage to break above.
Gold is trading between the range created post ECB earlier in the month, bear were rejected at the 1050 support zone and the metal was driven higher going into the weekend, now trading at the 1071.50 resistance level. A failure to break 1078 will see the bears regain strength as they break through the 1064, 1058 and 1050 support levels in an attempt to take the all significant 1000 handle. However, a close above 1078 will see the top end of the range at 1088 being tested as bulls try to stay off the bottom, going into the end of the year.