Daily Technical Analysis Report 29 April 2016

INDICES

FTSE sell-off fails to fully take hold

Yesterday’s attempted break through the 6237-6249 support zone failed to hold, with the index immediately rallying up to the 6324 resistance level (December 2015 peak). However, we have since seen the index drift lower, with that support zone once more in question. Given the importance of this zone, a bearish view would only come in the event that we see a break and hold below 6237. Should that occur, we would be looking towards support levels at 6163 and the head and shoulders projection, which coincides with the 6060 support level. Alternatively, should the 6237-6249 support zone hold, we could see another bounce, with resistance levels of note coming at 6324, 6337 and 6376.

DAX continues to respect Fibonacci levels

The DAX has once more sold off from just above the 76.4% retracement, with the index once more creating a lower high. Given the trend this week of also creating lower lows, there is a good chance that the current consolidation will result in another leg lower. The 61.8% pullback has been providing clear support at 10204 this morning, yet this is showing signs of being broken. An hourly close below 10204 would point towards a move down to 10123. This bearish view remains unless we see a move back above 10334.

Dow at key juncture

The Dow appears to be in an increasingly perilous situation, where yesterday’s sell-off has brought us back down within close proximity to a crucial support level. The 17775 low represents the 18 April low, which if broken, would look likely to spark a wider sell-off. Price is currently attempting to break below a pennant formation, which given the bearish entry, is the direction we would expect a breakout to occur. Ultimately the key is whether we see a break and close below 17775. Should that occur, we would be looking at 17731 as the only near term support level. Alternatively, should 17775 hold, we could see a bounce from this region, with 17845, 17862 and 17913 the next major resistance levels.

FX

GBPUSD

The bulls can look back on a good performance this month, but the pair still has to break the key $1.4668 area that we highlighted earlier in the week. If it is able to push on then we look to the 200-day SMA at $1.4881. With month-end looming it makes sense to wait for another dip in the trend, rather than chasing the rally, but as long as the piece holds above $1.45 we expect further gains.

EURUSD

So far this morning an early spike above $1.14 has been stymied, and with the intraday chart overbought we could see a reversal. In this case we would look to support around $1.13, but with the currency pair trending higher on the daily chart dips are likely to be short-lived, and should be viewed more as buying opportunities. It would take a close below $1.12 to cancel out the current bullish outlook.

AUDUSD

The price is heading towards the rising trendline of the daily chart (on the trend that began back in January), along with the rising 50-day SMA ($0.7535), which may indicate a turn higher could be upon us soon. However, for now it looks like bullish momentum has stalled, so traders could take the opportunity to sell into strength, with a first target on the downside of $0.7550, and then on down towards $0.75.

USDJPY

It makes sense to treat this pair with kid gloves, but the definitive move below Y108 means that any bounce in coming sessions is likely to be viewed as a selling opportunity. Current oversold conditions on the intraday chart, plus month-end mean that we may see an unwinding of USDJPY shorts that could push the pair higher in the short term. Resistance is likely to be found around Y108 and then Y108.70.

COMMODITIES

Bullish breakout for Gold

Gold is in the process of breaking out of a symmetrical triangle formation, which has been in play since early February. The key to a confirmation of this would be a closed candle (4 hour would give better confidence than 1 hour) above the triangle top of $1284. Should that occur, we are likely to see a strong week ahead for Gold. For now, we have clearly broken through $1271 resistance and subsequently found support, posting a bullish hammer candle this morning. With that in mind, further upside seems likely which looks onward towards $1280, $1284 and $1300. A closed hourly candle below $1271 would bring a more neutral view given that we are heavily extended to the upside currently.

US Crude rallying heavily

US Crude is in a very convincing and consistent uptrend this week, with resistance levels continuously being broken. As such, we are looking to continue our bullish view, with any retracements seen as buying opportunities. The most recent swing lows of $45.83 and $45.18 are key to gauging whether the rally still has legs. As long as we continue to create higher lows and highs, further upside seems likely, with $47.00 and $48.00 the next major handle in sight.

Brent shows no signs of stopping

Brent is similarly rallying heavily, with retracements few and far between. With that in mind, the bullish outlook remains in play, with the continued creation of higher lows and highs pointing towards further gains. Key near term support is found at $47.21 and $46.53. Near term resistance is expected at $48.55 and $49.01.

Disclaimer

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