Daily Technical Analysis. Thursday, October 26
The Euro rose on Thursday to its highest level since the beginning of the week following the Dollar’s decline, and high anticipation of the European Central Bank Meeting today.
The Market’s expectation is that the ECB announces its plans for balance-sheet management in 2018. Policy makers also hope to emulate the Federal Reserve in setting out a plan that not only strikes the right balance for the economy, but does so without disrupting financial markets.
Technically, despite recent gains, the EURUSD pair still has to break above the 1.1835 and 1.1850 resistance levels to confirm the continuation of the rally. A drop below the close support at 1.1800 levels would affect the recent uptrend and cause the market to proceed on a sideways movement.
We see slight declines in the British Pound Sterling on Thursday after it advanced nearly 1 percent against the US Dollar in yesterday’s session, the best daily performance since mid-September. This great performance came on the heels of recent developments and GDP Data reported from the UK Economy, which performed positively in line with expectations.
Technically, despite recent gains in the GBPUSD pair, prices still have to break and hold above resistance levels at 1.3280 and 1.3295 to confirm that the uptrend continues. A drop below the close support at 1.2340 levels, would affect the recent uptrend and cause the market to proceed on a sideways movement.
The US Dollar weakened, hitting its lowest level since the beginning of the week against a basket of major currencies, causing the Japanese Yen to recover from yesterday’s 15-week low. The Yen was also further strengthened following comments by renewed confidence in the Bank of Japan.
He stated that the Japanese Central Bank should not be criticized for not achieving the Inflation target as its expansionary Monetary Policy has helped boost the Economy and create jobs.
In terms of technical reading, prices are still moving within the framework of a negative correction to the upside. Support levels at 113.25 and 113.00 is still considered the most important levels in the short term, and the strength of the pair above these levels would restore the confidence of buyers. On the other hand, any indication of a change in direction on the short-term will have a positive effect on the movement of prices.
Technical reading shows that prices are consolidating following the recent strong rally. With no signs of a general upward trend change, if the pair breaks support levels at 0.9900, prices may fall further testing 0.9880 levels.
At the same time, a breach of near resistance levels at 0.9915 would invite the Bulls to the market and possibly the pair would advance to test the 0.9940 levels.
Gold prices moved within a tight range on Thursday, after showing some strength yesterday, taking advantage of the decline in the US Dollar, as well as the poor performance of the US Stocks following lower-than-expected earnings.
Technical reading shows that the yellow metal is trying to absorb the recent lingering selling pressures. With no clear signs of a reversal of the overall bearish trend, the precious commodity, a breach of the 1280 resistance levels would allow the market to correct higher, and possibly test the second resistance at 1284 levels. A break in the support level at 1277, would encourage the Bears to remain in the market.