Wednesday

Medium term outlook on EUR, AUD and Goldby Liviu

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EURUSD

Upside action extends towards 1.4600, fresh yearly top which has been reached earlier today, before initiating the current pullback. Current pullback seem corrective and yesterday’s top at 1.4535 is the nearest intra-day support. Hourly sentiment becomes negative and a break down below 1.4535 will most likely bring some more bears back into the market, aiming the next downside objective which comes around 1.4400. On a short-term basis, the longer-term resistance levels formed at 1.4620 and 1.4720 respectively are getting closer. Odds favor further gains therefore a break of the said resistance region which is also marked in the weekly chart attached below. I’d say that current market levels are normal since we’re trading into the middle of both 2007 and 2008’s regions (a bit above, though). In bullish markets, a record high of today will seem to be such a cheap price in the future, therefore 1.5 looks like a normal target on current uptrend. Expect fear and panic to emerge above 1.5 if we get there – as some of you remember how it was back in 2007 when 1.4 has been reached then everybody started to point towards 1.5, then 1.5 was breached by the end of February in 2008 and everybody started to point towards 2.0, which luckily for us (or some of us), has not been reached. The current bullish structures in equities and commodities favor further gains on EUR against the dollar. The S&P is also facing a top, formed by 1041 and despite the last two pullbacks – one in August, and 2′nd by the beginning of September, the uptrend has been well supported by the rising trend line seen on the S&P daily chart attached below. A potential break above 1041 will be correlated to a break out above the 61.8% in EURUSD, which is set at 1.4620. Watch this upside zone of 1.4620-1.4720 on the coming days as it may provide clues on next objectives – a fast break above 1.46/1.47 clearly opening 1.5 for extended gains.

AUDUSD

It’s been a while since I last posted my views on Aussie – although it is one of my favorite currency pairs. Looking at the medium term charts, it seem that trading the Aussie was relatively easy – just buy here and there, with some decent stops to protect against the pullbacks which were not too large or violent, averaging 300 points – 500 points being the larger ones since the whole rally started around .6200. What I want to say is that the pair managed to climb higher, approaching a level which I’ve been watching since a few months ago: .8700 – the rising trend line of the long term trend started in 2001. breaking above this line will be an important bullish confirmation of current trend. Although it’s clear as day light that we are on a rising trend since the fast breach of .8000, one more confirmation is always welcome. Expect some potential reaction on reaching this level, though, as it may trigger some solid selling interest.

Gold

Gold is also worth watching as it is facing an important barrier on the upside. The recently formed double top is arguably a triple top if we count the top of May which has been set a bit lower and even a quadruple top by including the top of July 2008. Whatever the count is, it is clear that 1000 is an important level. Today’s reaction suggests some downside action but watch for support into the former resistance zone 970.

I wish you all a great evening!