Top 3 charts of the week: OIL, FRA40, EURPLN

- Brent continues upward move but runs into an obstacle
- French equity market index reverses in the vicinity of YTD peak
- EURPLN tests upper limit of the recently broken trading range

OIL

Brent managed to break above the upper limit of the consolidation range at the end of the previous week. Upward move is continued this week above the downward sloping trendline as sentiment remained upbeat following a shift at Saudi top oil job. However, price reached the price zone ranging below the 38.2% Fibo level of the downward move started in April and began to struggle there. A pullback could start from this area. In such a scenario the 50-session moving average (green line, currently at $61.60) should as the nearest support level while the breakout zone around the 23.6% Fibo should act as the first major support. When it comes to the resistance levels ahead, traders should focus on 200-session moving average (purple line, currently at $64).

Source: xStation5

FRA40

European stock market indices saw strong gains over the past 2 weeks as investors were hoping for ECB to provide more stimulus during the next meeting. While the meeting has not taken place yet, the questions arose whether Draghi will relaunch QE or leave the decision to his successor, Christine Lagarde. In turn, stocks from the Old Continent started a pullback this week. The French CAC 40 (FRA40) is retracing from the vicinity of the YTD high. The index is eyeing a test of the price zone ranging 5525-5550 pts, that saw price reaction several times over the past 2 years. A break below could trigger a deeper pullback and lead to a test of the 200-session moving average (purple line) as it was the case with two previous corrections (orange circles). 

Source: xStation5

EURPLN

This week is all about ECB meeting. Market expects central bank to pull a trigger by simultaneously cutting rates and restarting QE. However, such a move could be an overkill and Mario Draghi may not want to take such a bold step at the very end of his tenure. Having said that, the scope for a hawkish disappointment is quite high. EURPLN may be an interesting market to watch due to this event. The pair broke above the long-term consolidation amid recent EM weakness. Thanks to the improvement in moods EURPLN is now testing the upper limit of the consolidation from the topside. A hawkish disappointment from ECB could facilitate a rebound but in case the Bank somehow manages to meet or exceed expectations a return to the previous trading range looks likely.

Source: xStation5