Gold Signaling a Possible End To A Long Lasting Sideways Trend

Yesterday’s session may not have been a game changer but we definitely saw an uptick in gold’s volatility and momentum. That’s a first step towards a more significant movement hopefully in the near future.

What changes do yesterday’s upswing bring?

XAUUSD Daily

First of all, the price confirmed the bounce off the mid-term up trendline (red) connecting higher lows since the middle of December. We also made new yearly highs, and to top it off the price managed to break the horizontal resistance on the 1830 USD/oz. With all that, I’m guessing gold bulls are at least a little bit satisfied.

What stays the same?

The price is still inside of the long-term symmetric triangle pattern (blue). As long as we stay inside, there is no legitimate, long-term trading signal. For this, we would have to see the breakout of the upper line of this formation first. The thing is we can easily go to this line and bounce, which will bring us back to the boring, exhausting sideways trend.

I think that recent movements on gold disappointed everybody, even traders who aren’t interested in the asset. Yesterday, the light in the tunnel appeared bringing us a little hope to finally introduce some action to this precious metal. Staying above the 1830 USD/oz support should definitely help.

DAX Creates Head and Shoulders Pattern

Markets can’t find a direction, movements are rather choppy and it’s hard to talk about any strong, dominant trend. Buyers are preferring to stay away right now, giving more space to the bears. All this falls in line with a very handsome setup on DAX, that I’d like to present to you in this analysis.

DAX chart

The last three weeks on DAX, allowed the price to create a very beautiful Head and Shoulders pattern (green). I assume it’s less beautiful for buyers (as it promotes the downswing) but even they have to admit that the pattern’s drawn really technically. Top of the head bounces off the all-time highs and the neckline (yellow) is a horizontal support which, at the first half of December, was a crucial horizontal resistance.

The bad news for buyers is that today we managed to break that support, which in theory gives us a proper sell signal. The potential target for this is on the absolutely crucial long-term support around 14900 points (orange). In theory, we should suspect that the price will get there in the next few weeks.

That sets a bearish tone of course. From a technical point of view, that bearish signal could be cancelled, if the price comes back above the neckline or today’s breakout happens to be a false one. There’s always a chance of that happening, so before making any decisions, one should make sure that the bearish breakout is legitimate. Closing a day below the yellow support would help but also the next daily candle with lower lows and highs would confirm the breakout.

EUR/GBP Trades on a Crucial Bullish Stronghold

We will discuss the situation on the weekly chart, so there is not much here for the scalpers and day traders. First of all, taking a quick look on the chart and you do not see this Armageddon effect which was supposed to happen after Brexit. Traders, have no hesitations in terms of buying the Pound and they have been doing that constantly since the March 2020.

The main reason, why we wrote this piece is the fact that after weeks of declining, the price finally reached the mother of all supports for the EURGBP. This support is a horizontal area around 0.8320. It was a key level, at the end of 2016 and beginning of 2017. Also, at the end of 2019 and beginning of 2020. It is important now as well.

EURGBP reached that support last week and surprise surprise, we saw a bullish bounce. This is an amazing place to open a long-term long position, in theory though. We always need to be aware of the possible breakout to the downside. That should not worry us as there are always stop loss orders, which you can use and, in this case, it is pretty clear where they should be placed – below the orange support. That gives us an amazing long trade possibility with a very tempting risk to reward ratio.

In case the support would be breached, that opens us an occasion to go short but chances for that are now limited, although we cannot exclude this possibility and if it will happen, traders should act accordingly, so open a long-term short.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Approaching the Up Trendline

With almost every tick down, sellers are celebrating the new bear market. Most of that is generally just wishing not trading and is mostly betting on possibility than probability, but we all know that in trading it’s the probability that wins.

S&P 500 daily chart

With that being said, let’s talk a look on the SP500, trying to be as much objective as we can, taking into consideration only the chart and the story behind it. First thing you see is the rise from the end of the year, which ended with establishing the new all-time highs. Many will call it a Santa Rally and they will not be mistaken. We can see, that it allowed to break the crucial horizontal resistance around 4740 (orange). Just for a while though, which actually can be worrying as it makes a false bullish breakout (yellow). False breakout usually tends to give strong signals in the opposite direction, so in our case, to the downside.

There is an important resistance (orange) but there is also a support. The crucial one is the dynamic up trendline (black), connecting most recent higher lows. It helped the buyers a few times and can help them again.

We are currently locked between the horizontal resistance from the top and the dynamic resistance from the bottom. As long as we stay between them, there is no clear trading signal. The breakout of the 4740 resistance, will give us another mid-term buy signal and the breakout of the up trendline, will give us a signal to sell, as for now, the best option seems to patiently wait.

Dollar Index Breaks Two Crucial Supports With One Still Left

It happened! Dollar eventually ended the two months sideways trend that has been going on since the middle of November. As we expected in our yesterday’s analysis of the EURUSD, it happened with the help of the CPI data. Yesterday, we talked about the EURUSD, today, let’s check the situation on the general Dollar Index.

DXY daily chart

Here, we had a pennant formation (green lines), which in theory should be a trend continuation pattern and promote the breakout to the upside. Reality hit this instrument differently and the price broke it’s lower line. That was a first crucial support to be broken thanks to the CPI print. Second one was the mid-term up trendline (blue), which was connecting higher lows since the end of May. Breaking those two should be enough to claim the bearish victory.

I have one problem to give this victory away just like this and this problem is the horizontal support on the 94.6 (orange). As long as we stay above, Dollar buyers can still have hope. Yes, breakout of this line will be the end of the USD strength in the mid-term but as long as this line holds, we still cannot claim full bearish victory.

Great Technical Setup on the EUR/USD, Is waiting for the CPI Data to Spark a Movement

We’ll see. The reason we are looking forward for an increase in volatility is that the EURUSD is approaching the end of a rather boring sideways trend and traders need to eventually decide which way they want to go.

EUR/USD daily

The sideways trend on the EURUSD has lasted since the second half of November and is shaped like an ascending triangle with a horizontal resistance at 1.137 (orange) and the rising dynamic support (red). A breakout of one of those two should bring us a proper mid-term trading signal. A breakout to the upside should give us a buy signal and a breakout to the downside should give us a sell signal.

In case of a breakout to the upside, there’s one additional resistance that we should be aware of. This resistance is a long-term down trendline (blue), which connects lower highs since May 2021. Only a breakout of that resistance will bring us a legitimate and powerful buy signal on the EURUSD, just crossing the 1,137 level may not be so significant.

The CPI data that we’ll find out really soon look like a potentially great fundamental trigger to start one of the movements described above. In this case, we don’t have to be so patient, the data will be published really soon.

Cable Patiently Waits Below Crucial Resistance

GBP/USD Weekly chart

In December, 38,2% acted as a bullish stronghold, stopping the bearish correction, which started in June. We are not surprised as 38,2% Fibo is famous for doing that.

The correction itself was a very beautiful flag (green lines) and what makes it even more beautiful is that the movements inside of this flag were in line with the Fibo levels mentioned above. OK but how can we use it in our favor? First, we need to check where we are now. The price is currently waiting on a combination of two important resistances. A horizontal resistance, so a 38,2% Fibo and a dynamic resistance, so the upper line of the flag. You can imagine how crucial those levels are for the future of this pair.

Price breaking those two, would trigger a new long-term buy signal, which would possibly give us a long, bullish wave, possibly lasting for weeks. On the other hand, price bouncing from this area sharply, would delay or even cancel that scenario.

We need to be patient and wait for the price action to give us a proper signal. We can look for hints elsewhere. EURUSD and Dollar Index are currently locked inside of very narrow sideways trends. Breakout on those two instruments should show us the direction for the American Dollar, so in consequence for our instrument as well. Buyers on the GBPUSD need the weaker Dollar. Everything for the buy signal on Cable is ready. All we need to see is the price closing a weekly candle above the 23,6% Fibonacci.  Chances for that are quite high.

For a look at all of today’s economic events, check out our economic calendar.

The Time and Place To Defend NASDAQ Is Now

We can say in all certainty that the first few days of 2022 for the tech heavy NASDAQ have been terrible. 2021 ended close to all-time-highs and 2022 so far is a year of misery and suffering. Sure, maybe those words are too strong but I’m sure that people who are going long would totally agree.

Post pandemic trading on stocks and indices can be pretty much summed up by one phrase: Buy the dip! So, when over those several months we had a correction, traders were eagerly anticipating the local dip to buy with vengeance. That created a lot of V-shaped reversals on the chart and frankly speaking was a bullet proof approach for months. Will that be the case now too?

NASDAQ Daily chart

The reason we are wondering is because the NASDAQ is currently flirting with an absolutely crucial long-term support. This support is created by the combination of two important lines: a horizontal and a dynamic one. First the dynamic one – it’s an uptrend line, which connects crucial higher lows since June 2020 (blue). The horizontal one is the area around 15600 points (orange), which has already proven to be a great help throughout December.

It’s absolutely crucial for buyers to buy the dip here and defend this area (green). If we will see a breakout, that would mean a long-term sell signal and potentially huge trouble for the tech index. The next few days should be really interesting.

Silver Is Approaching the Mother of All Supports

To be honest, I thought that gold and silver would do a lot better, but here we are today where both are in the group of some of the worst performing commodities over the past several months. And the situation just got even worse.

XAG/USD 4 hour chart

First the H4 chart, where you can see a very handsome head and shoulders pattern. The neckline (red), was already broken, so the formation is up and running, which means a further drop. Currently, we have a small stop (green rectangle), which is just a very flat correction proving the bearish point.

You can see that the price is approaching the orange horizontal support. What is that line? Silver’s daily chart will definitely help us understand. That is 21,7 USD/oz, so an ultimate long-term stronghold for buyers. This level means ‘to be or not to be’ for the bullish fraction on silver.

XAG/USD daily chart

The way to trade it is pretty simple despite the gravity of the situation. A proper bounce (with a pattern or candle) would be a legitimate buy signal. On the other hand, a breakout with a nice-looking candlestick, would mean a proper sell signal. For now, all we can do is wait.

USD/CHF Climbs Higher After the False Bearish Breakout From the Triangle

At the beginning it was fine, because swings were pretty significant, but the giant symmetric triangle was narrowing and the latest price changes were almost invisible. For example, look at the orange rectangle. No direction whatsoever.

USD/CHF daily chart

The situation changed a bit recently. At the end of last year sellers managed to take initiative and the price broke the lower line of the triangle. Normally, that should give us a proper, long-term sell signal. I mean it did, but it happened to be a fake one (red rectangle).

How is that helping us? Well, false breakouts can be great trading opportunities in themselves. Yes, initially you are caught in a movement in the wrong direction but the comeback gives you a chance to close your losing trade and open one in the opposite direction. Usually, false breakouts give amazing signals to the other side. So, in theory, when we had breakout to the downside, now we should see a few bullish days or even weeks.

With the price being back inside of the triangle. The next direction should be the upper line of this pattern, which leaves us a lot of space to jump into a bullish trade. As long as the price stays above the lower line of the triangle. The sentiment is positive.

For a look at all of today’s economic events, check out our economic calendar.

American Dollar Still Sleepy, Waiting for a Breakout

Santa is here, even after Christmas. Indices continue the movement to the upside. Many major indices are currently flirting with all-time-highs.

Dollar Index continues trading inside of the pennant formation. Breakout should happen really soon.

Of course a very similar situation can be spotted on the EURUSD, where the price is slowly approaching the end of this sideways movement.

GBPUSD is enjoying the bounce from the 38,2% Fibo and the lower line of the flag formation.

Almost the same is happening on the NZDUSD but here buyers are more cautious and the bullish momentum is not as admirable as on the Cable.

CHFJPY is enjoying the upswing after the price was locked between Fibos for almost six weeks. Great example of what happens when the price eventually escapes from the sideways trend.

Silver is not bothered by the stronger USD and is aiming for the long-term dynamic resistance.

Gold is doing slightly worse. The shooting star on a daily chart can especially be a problem for buyers.

Oil broke a major horizontal and dynamic resistance. Sentiment with that is definitely bullish.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Drops Before Christmas

Indices climbed higher after another V-shaped reversal.

The dollar Index bounced off the lower line of the pennant. Sideways movement continues but the end is near.

The GBPUSD bounced nicely from the 38,2% Fibonacci. Finally!

The same goes for the NZDUSD. The triple bottom formation looks complete.

The USDCHF completely lost momentum. Watching paint dry is actually more interesting than trading the USDCHF.

The EURNZD continued the reversal to the downside after the false breakout pattern from the beginning of the week.

The CHFJPY finally escaped from the weeks-long sideways trend. The breakout is to the upside.

The CADCHF reversed and created a false breakout pattern and is ready for a further rise.

Silver defended its 22 USD level. A great success butt there’s still a lot of work for buyers to do.

Dollar Continues Moving Sideways

DAX performs a V-shaped reversal but the optimism stops today on a crucial resistance; 15440 points.

Brent Oil bounces off a crucial dynamic support.

Dollar Index extends the pennant formation awaiting the breakout.

EURUSD enters the rectangle pattern continuing the sideways movement.

After choppy movements, GBPUSD finds itself still trading above the 38,2% Fibonacci.

The same with NZDUSD, which is doing everything to stay above the 38,2% Fibo.

USDCHF continues trading inside of the symmetric triangle pattern.

EURNZD jumps above important horizontal resistance and today, testing it as a support.

CADCHF breaks an absolutely crucial long-term support. That’s a strong sell!

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD and NZD/USD Rise From the Death!

USD loses traction and allows other currencies to catch some breath. On many pairs, this initial reversal is happening in very interesting places.

GBPUSD is bouncing from the lower line of the flag and the 38,2% Fibonacci with a beautiful inverse head and shoulders pattern. The neckline is already broken, so the buy signal is ON.

A similar situation can be seen on the NZDUSD but here, instead of the iH&S, we have the triple bottom formation.

EURUSD is bouncing from the lower line of the pennant.

GBPJPY defends a crucial horizontal support and aims higher.

USDCHF still waits for the breakout from the symmetric triangle pattern. Currently we are in the middle.

AUDCHF aims higher after the price makes a V-shaped reversal after touching the lower line of the flag.

CHFJPY continues another week inside of the rectangle, between the 23,6% and 38,2% Fibonacci.

CADCHF is attacking a long-term horizontal support. A breakout can bring us a proper sell signal.

For a look at all of today’s economic events, check out our economic calendar.

Waiting for the Bigger Movement on the USD

DAX ends the flag and tries to aim higher.

Nasdaq is about to test an absolutely crucial horizontal resistance. A bullish breakout will mean a proper buy signal.

Dollar Index is inside of a pennant, waiting for a breakout.

The same with the EURUSD.

GBPUSD bounces from the lower line of the flag and 38,2% Fibonacci but the momentum could have been higher.

USDCHF is still inside of the long-term symmetric triangle, waiting for the breakout like the Dollar Index.

CHFJPY is still locked between two important Fibonacci retracements. The rectangle continues.

CADCHF is also inside of the lock-term triangle. This week may result in a test of its lower line.

For a look at all of today’s economic events, check out our economic calendar.

Indices Try to Correct Lower and EUR/USD to the Upside

SP500 reaches an important resistance and creates a head and shoulders pattern on the lower timeframes. The neckline isn’t broken yet, so buyers can still chill.

DAX is correcting a recent surge inside of a flag formation.

Silver is raising pressure on a long-term horizontal support.

EURJPY with a false bearish breakout is ready for a new bullish wave.

CHFJPY is locked inside of the rectangle between two Fibonacci’s: 23,6% and 38,2%.

EURUSD is trying to initiate the reversal with an inverse head and shoulders pattern but is still trading below the neckline.

GBPUSD is still under heavy selling pressure but may use the 38,2% Fibo in order to create some kind of a bounce in those oversold conditions.

For a look at all of today’s economic events, check out our economic calendar.

Europe Opens With the Risk ON Mode

Futures start the new week on the front foot, with the SP500 being above crucial support on the 4555 points.

DAX is trying to draw a right shoulder of the iH&S formation.

USDJPY is defending the crucial support on the 112.8.

AUDNZD is escaping from the wedge to the upside, giving hope for another bullish wave.

GBPUSD is bouncing off the 38,2% Fibo and the lower line of the flag, in theory, that’s a good place for a proper buy signal.

EURPLN continues to drop after the false breakout above the 4.64.

The Mexican peso turned around the weakness it experienced at the end of last week and starts the new week with gains.

For a look at all of today’s economic events, check out our economic calendar.

Crucial Supports Under Pressure

Many instruments approach the end of this week on crucial support and/or resistances. I guess the next week will be full of some juicy movements on many assets.

Gold is still suffering, trying to defend mid-term dynamic support.

Silver is trying to defend the most important horizontal level this year, 22.2 USD/z.

SP500 goes down aiming for the long-term up trendline.

DAX with eyes on the 14200 points – as on Silver, the most important support this year.

USDCHF continues the drop after the false breakout from the symmetric triangle pattern.

EURUSD tries to catch some breath and aims slightly higher.

EURPLN reverses after the intervention from the Polish Central Bank and creates a false breakout pattern.

Mexican Peso with a possible inverse head and shoulders pattern on both pairs: with USD and EUR.

For a look at all of today’s economic events, check out our economic calendar.

Traders Were Hoping for a Stronger Bounce I Guess…

So far, the recovery from Friday’s carnage is, let’s say, pretty mild. The same mild as apparently, the symptoms from the new coronavirus strain are. That information was about to drive today’s reversal but as you can see, traders are not encouraged to buy the dip at this point.

Gold is defending the mid-term up trendline.

SP500 bounced during the Asian session but the European one does not start well.

DAX is giving back almost all gains from the Asian session.

USDJPY continues the downswing after the breakout of the mid-term up trendline.

EURJPY drops after breaking crucial horizontal support.

AUDNZD continues a very technical movement by creating a wedge finishing the correction on the 38,2% Fibonacci.

USDCHF is trading lower after the false breakout from the symmetric triangle.

The Mexican Peso continues the weakening to USD and EUR despite quite a good opening after the weekend.

For a look at all of today’s economic events, check out our economic calendar.

Risk Off Is Back. Indices and EM Currencies Drop. Safe Havens Surge

Shocking night and morning for the vast majority of stock bulls. Indices are collapsing and the new strain of the virus is apparently to blame.

In this situation, safe-haven assets like gold for example are gaining traction. Gold is aiming higher after breaking the neckline of a small inverse head and shoulders pattern.

Yen is also gaining, USDJPY is currently performing an attack on the mid-term up trendline.

EURJPY is testing crucial long-term horizontal support on the psychological level of 128.

USDCHF is dropping after the false breakout from the symmetric triangle pattern.

EURUSD is trying a small bullish reversal to test the major horizontal resistance.

USDMXN advances higher after the breakout of an important horizontal resistance.

EURMXN continues the rise after the price escapes from a beautiful wedge pattern. A price action classic!

For a look at all of today’s economic events, check out our economic calendar.