EURUSD selloff back on, GBPUSD at key crossroads, FTSE100

FTSE 100

Having shot higher for two days, the index is entering a period of consolidation, with the potential for downside support at 6600 and then 6500. Although the index has moved sharply higher, with new highs seen last night in US markets we may still see further upward momentum. A break above yesterday’s high at 6700 would signal more gains are on the way, with 6770 and then 6820 the next areas to watch.

Dax

Although a push above the talismanic 10,000 eluded the index yesterday, it looks like more gains may still be on the way. If a bigger selloff materialises then we look to 9800 and then 9700, with ‘buy on the dips’ still the approach to take here. If 10,000 is broken then the 200-day SMA at 10,080 comes into play, and then from here the next target is 10,400, the closing highs of June and late May.

S&P 500

Chasing an all-time high might not be the most prudent path at present, although it would not be surprising to see a further push higher, especially if earnings season puts a further positive gloss on the US market. Nonetheless it does make sense to go with the trend, perhaps waiting for a more sustained dip for an entry. Potential support comes in at the previous highs of 2120, while yesterday’s high around 2156 is the level to watch for a fresh breakout to the upside.

FX

EURUSD selloff back on

Yesterday’s rally in EURUSD appears to be behind us, with the pair selling off once more upon topping out yesterday morning. We are currently seeing a break below the morning low of 1.1053. With that in mind, we are back into the medium term bearish picture, which is our preferred scenario. As such, further downside seems likely, with the continued creation of lower highs and lows expected. As long as price does not post an hourly close above 1.1071, then further downside seems likely, with 1.1035 and 1.1015 the next support levels of note.

GBPUSD at key crossroads

GBPUSD has seen a sharp appreciation over the past two days, feeding off the news that Theresa May will now get a direct route to No.10, thus providing a greater degree of certainty for markets. The being said, we do expect some form of easing from the BoEtomorrow, which provides us with the potential for GBP weakness. Given that we have not seen the pair break through the crucial 1.3349 swing high, there is a potential for the pair to start turning lower. Looking at the stochastic, the have clearly broken lower from a topping pattern, which could point towards impending weakness. As such, it makes sense to await an hourly close above 1.3349 for a bullish scenario or below 1.3224 to take our lead.

USDJPY awaiting triangle breakout

USDJPY is trading within a symmetrical triangle pattern, in a retracement of a very strong uptrend. This rally comes off the back of expectations of easing at the BoJ. With that in mind, there is certainly a good chance we will see another leg higher, yet it makes sense to await the breakout from this pattern. Thus an hourly close above 104.50 would look towards 105.00 and 105.55 resistance. Conversely an hourly close below 104.00 would look for a deeper pullback towards the 103.58 and 103.02 support levels.

COMMODITIES

Gold breaks below key support level

Gold has retraced lower this week, with yesterday seeing a break below both the $1351 and $1335 support levels. With that in mind, there is likely to be further downside to come despite the current bounce. The next notable swing high is around $1358, which would need to be broken to return the bullish bias of the medium term. However, for the short term, it seems likely that we will see further losses, with the 76.4% retracement (also at $1351) the most interesting resistance level in view.

Brent rally unlikely to last

Brent broke back into the triangle pattern yesterday, with a sharp rally into the trendline and Fibonacci resistance. We have got very clearly defined lower highs in place here and until we see an hourly close above $49.74, it seems likely that we will see another move lower soon. The stochastic oscillator is clearly turning lower from an overbought position, adding further credibility to the idea that we will see the sellers come back in soon enough.

US crude expected to turn lower

US crude has also been seeing substantial gains yesterday, yet looks likely to sell off given the existence of trendline, Fibonacci and SMA (50) resistance. We would need to see an hourly close above $48.64 to negate this bearish view.