Weekly Forex Update: GBP/USD
The Euro continues to surge against the U.S. Dollar, and recently broke through the previous ceiling at 1.3334 (which was the high from August 6). This move has now solidified the bullishness that was confirmed when the EUR/USD traded through the 200 period simple moving average at 1.3198.
The EUR/USD easily broke through the resistance area between 1.3097 and 1.3426 as identified by the Autochartist Forecast reading. The ten-bar Initial Trend reading confirmed a strong trend on the Pennant breakout despite the lack of bullish momentum behind the downtrend line break. The Forecast area should now be considered potential support on a pullback. As prices continue to rally and now test resistance at 1.3500, many traders are looking ahead to what could be a more significant ceiling for the pair should the U.S. Dollar continue to sink.
The Triangle breakout through downtrend line resistance at 1.3145 has triggered an Autochartist Initial Movement/Momentum (AIM) entry long, creating anticipation for higher highs, though selling pressure at 1.3500 will likely smother buying momentum before prices reach the April highs between 1.3680 and 1.3692. The key to more upside is where exactly intraday support waits to help the bulls keep their footing; near-term support levels appear to be at 1.3431 and 1.3413. If there is a more significant retracement lower, look for buying support at 1.3385—this is currently the uptrend line support of a Rising Wedge pattern on the 240-minute time frame.
Weekly Commodities Update: Gold
The uptrend on High Grade Copper’s daily chart continues to push higher along with an overall rally in metals. Copper has the added demand of being used in many electrical and electronic products. The weakening U.S. Dollar has also contributed to the commodities rally, and Copper has followed this trend. Home construction is another sector that affects demand; however, with flat New Home Sales numbers we see a stalled demand for copper used in electrical wiring and pipes.
The Rising Wedge pattern on the daily time frame has broken higher through resistance at 36297, triggering an Autochartist Continuation of the Trend (ACT) buy entry. The breakout could be tempered by the four-bar Autochartist Initial Trend reading that indicates the daily time frame has transitioned from an uptrend to a wide, volatile and sideways range. If that is the case, any follow-through higher is likely to be short-lived, and prices should retreat back within the pattern’s range. Despite the high Clarity reading, this lack of upside follow-through should not be considered a false breakout because the underlying market trend does not support a Rising Wedge pattern continuation. Alternatively, a swing buy could be set up off pattern support near 34900.
Weekly Index Update: U.S. SPX500
The daily time frame of the Japan 225 has found buying momentum after reaching support just below 8800. After making a low at 8796.4 on September 1, the subsequent rally alerted a Rising Wedge Emerging pattern that has formed over the last 32 candles. While this is a very short-term rally within an overall congestion period of three months, there has been a slowdown in the move higher on the Japan 225 as prices now test the range’s highs. The ceiling on the daily Japan 225 waits between 9700 and 9760.
This slowdown of the move higher is confirmed by the one-bar Autochartist Initial Trend reading, which indicates that the uptrend has lost bullish momentum. The overall sentiment can still be considered bullish though, since prices have found support at the pattern’s uptrend line at 9400. The likelihood of a continuation and a potential Autochartist Retracement/Correction (ARC) entry long depends on the uptrend line support holding, as well as how prices react to the “big figure” level at 9400. If this level is broken, the pattern will have reversed and prices might move lower towards prior support between 9220 and 9200. (Confirm a breakdown through uptrend line support with a negative MACD Histogram reading.) For now, watch the 9600 level, and for buyers to attempt to continue the march higher towards resistance waiting at 9700.
Provided by www.autochartist.com
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