After a Few Weeks of Rise eurusd Reverses

After a few weeks of rise, eur/usd finally reversed. The turnaround started on Monday (yesterday), when having reached 1.1370 resistance the pair formed bearish rail road tracks pattern and started collapsing. Today’s price action only confirmed bearish bias in Euro. You can open both 15 and 1 hour chart to see that. Price tried to rally to intra day resistance of 1.1330 two times today, but failed. Each time it formed a bearish candle pattern after which price fell. As yesterday’s (low) support of 1.1280 was broken during US session we may assume that the move downwards will only accelerate this week. Be ready to sell at failed rallies to intra day resistance levels. 

Tomorrow’s possible intra day resistance will be at 1.1280. You remember the old saying that previous support becomes resistance and vice versa. I think this could be true in this case too. 

The next level of support is seen in the area of 1.1240-1.1220. Hourly chart clearly shows that Euro bulls had to work hard to break the level from the 8^th to 10^th of September. 

Important fundamental data that may impact the exchange rate of the pair is on Thursday when Federal Open Market Committee Rate Decision is announced at 18:00 GMT. Watch price action after the event and be ready to go in the direction market goes. 

Gold is Going Down in Waves

Gold went up in three waves during the month of August after a dramatic collapse in previous months. In the same fashion it has been going down since 21^st of August when the top was made at 1170 level. The first wave formed from the 21^st to 24^th of August where it found short term support at 1145. It formed a bullish pin there. 

However, price made another wave down in the next couple of days from 25^th to 26^th of August. It then went up to test previous support that became resistance. 1145 was well defended by gold bears and price after ranging till the 9^th of September proceeded to fall (third bearish wave). 

It looks like price has found its short term support at 1100 level. Bullish pin at support on Friday indicates that price may go to its previous support of 1115-1116 level (now resistance). 

Looking at a broader technical picture, it does not seem that the move down is over. We might expect one more wave down that would take the price of the commodity to 1080-1070 area. This is the area where gold bottomed in the months of July and August. The fall should stop at that area. 

2 Bearish Pins in Oil on 4 Hour Chart

Strong rally in oil seems to have exhausted its initial momentum as price is stalling at 49 level. This is confirmed by price action on 4 hour chart. On the 31^st of August the first bearish pin candle pattern formed indicating increase of bearish pressure and strong selling (might be profit taking of the longs too) and the second bearish pin formed on the 1^st of September (both around 49 level). We do not want to jump to fast conclusions, but we may have a top in the commodity and a resumption of a downtrend any time now. Selling rallies becomes the best option for trading again.

 

Our bearish bias is also confirmed by 8 hour chart where price hit 200 ema and retraced. Current support is at 44 level and we expect price to stay between 49 and 44 levels for some time. Key support is now around 39-38 levels. 43-42 levels are less important support levels, but they should hold price collapse for the time being. They coincide with 200 sma and ema on 1 and 2 hour charts.  

Intra-day resistance is at 45.50 followed by 46.00 and finally 47.00. Momentum seems to have changed and shorts are favored now over longs.  

Oil may reverse at resistance

I took a short position in US oil an hour ago. You may see from the chart below that oil broke above the highs of the 14^th and 17^th of August, hit 200 sma and ema, formed a reversal pattern and is actually reversing now. 

We do know that oil has been in a strong trend recently and the tendency may not be over yet. Selling rallies remains the best option for OIL traders, particularly when price rallies above previous day’s highs. That’s where most stops reside and smart money gets a chance to re-enter in the direction of the prevailing move. 

Again, US CPI and FED minutes may influence the price of oil, but I do expect price to reverse and visit the lows soon. Current support of US oil is at 41.50 and key support is at the round and powerful 40 level. Who knows, maybe that is the bottom and oil will turn around, but before we state that we need to see confirmation on the charts. They are not present yet. 

Despite the fact there hasn’t been much price action in these couple of hours, US session will probably bring volatility back. 

US oil 1 hour chart (resistance has been reached)