Summary:
- GBPPLN bounces off the 1:1 market geometry
- EURUSD remains under bears’ pressure
- Time to correction on the gold market?
GBPPLN rebounds off the key resistance
The exchange rate of the pound against the Polish zloty reached a key resistance last week. The level is marked with the upper limit of the Overbalance system, measured with the largest correction in the whole downward movement started March. According to the methodology, a bounce off the 4.7800 handle should herald the continuation of declines and movement towards new lows. Having said that, the trend remains downward and potential reversal could occur only with the break above the aforementioned resistance. In such a situation an upward move towards the 4.9100 handle cannot be ruled out, but such a scenario does not seem likely at the moment. Currently, the supply side seems to be in control. According to the Overbalance methodology, weekly close at or below current levels could be a signal for bears to deepen declines. In such a scenario, a pullback could take the pair to as low as 4.5850. It seems that at the moment the only chance for the pound to recover is complete rejection of the "hard Brexit" option. However, no negotiations between the EU and the UK are being held at the moment and neither side wants to back down from its commitments.
Source: xStation5
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Open account Try demo Download mobile app Download mobile appEURUSD breaks below 1.1100 handle again
The EURUSD currency pair has been trading in a downward trend for a long time. The price broke below 1.1100 handle last week.. Considering the long-term downward trend and the lower close of the previous week, a movement in the direction of parity could take place. Moreover, the pair broke below the 61.8% Fibo level after numerous tests, so the way towards the 78.6% retracement is left open. However, as far as the longer term is concerned one should keep in mind that the Federal Reserve may continue policy easing and, in turn, limit potential declines on the pair.
Source: xStation5
Gold reaches the key resistance
Last but not least, let’s move to gold market. From weekly interval, gold is trading under the key resistance zone. This zone is marked with 61.8% Fibonacci and lows from 2011 and 2012. Apart from that, the upper limit of the upward channel can also be found in the area. One should also keep in mind that the ongoing rally is already bigger than the one observed in the first half of 2016 (length marked as red). This is another factor that may suggest that a correction may be looming. However, possibility alone may not be enough for such a scenario to materialize. Upward momentum on the gold market is very strong, so one should be careful when looking for a trend reversal. In case a break above the mentioned zone occurs, the rally may even accelerate. However, the place is not indifferent, so it is worth to also analyze the situation on a lower interval.
Source: xStation5
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