Oil Hit Upper Trend Line

I mentioned in my earlier post that a possible bearish triangle was in formation in oil. Looks like my predictions are confirmed as today price hit upper trend line of the triangle and is reversing to the downside at the time of writing. As you may see from the chart below we have pressure building up for the commodity to go down. Any time it rallies up, it faces resistance earlier than previous time. So, the first point was 49.30, followed by 48.40, then 46.40, later 46.00 and now 45.60. Let me remind you that breakout traders would sell a break of key support that currently is 43.50-43.00 area. 

If breakout materializes we may see the security to go down as low as 37.50 (the low of August 24). I do have a small short position from 43.16 with a stop loss above today’s high. Let’s remember that the longer term trend is still down and a resumption of the direction may start any time now. FOMC rate decision tomorrow can surely be a good trigger for the continuation of the downtrend. Anyway, any bearish candle on the hourly chart at resistance could be a good point for entering a short position. Let’s wait and see what happens to the commodity. 

Euro falls against US dollar

Euro crashed against US dollar when London markets opened. The pair dipped below Thursday’s low (1.1080 level) and is now consolidating. We do expect a bounce at this point and possible move back to 1.1100 level before US session begins. 1.1080 level is now resistance (previous support becomes resistance). 1.1062 (current low) should act as support. 

Euro bulls should be looking for a reversal pattern near support to confirm a false breakout downwards and a possible return to 1.1140 level. With no major news from Europe or US we may assume that price will remain range bound and fluctuate between 1.1050-1.1130 levels. 

After high was reached on Thursday we may also assume that there is a slight bearish bias, but that has to be confirmed by moving further below 1.1050 level. 

US CPI (Consumer Price Index) that is to be released on Wednesday at 12:30 GMT should give more directional bias for eur/usd pair. Minutes from FOMC the same day at 18:00 GMT could make even bigger waves in Euro/Dollar exchange rate. Generally speaking, prices are range bound while the main trend still remains downwards. 1.1500 level has to be broken decisively in order for the sentiment to change. 

eur/usd 30 minute chart (possible false breakout below Thursday lows)