TThe EUR/USD pair is seen to be testing the diagonal resistance line for the last few hours as shown on the 4H chart. The pair has exceeded 1.0757 by a few pips and has made intraday highs at 1.0782 levels today before dropping lower. A potential bearish candlestick pattern (evening star) has been produced right at the resistance line and a bearish reversal here would confirm that wave (2) is in place at 1.0782 levels and the next major direction is lower from here. There is little doubt that the A-B-C corrective rally has almost reached the 88% percent fibonacci resistance levels but a turn around has been seen next these levels as well. A bottom line remains the 1.0830 resistance going forward. Only a push beyond 1.0850 levels would reverse the structure for the short term. Immediate resistance is seen at 1.0830, while support is seen at 1.0600 respectively.
Please remain short for now, stop at 1.0850 levels target 1.0600, 1.0300 and lower.
Gold chart setups:
Gold hourly chart presents a short-term wave structure. Please note that the entire drop from $1,264 through $1,195 has been retraced up to 50% and prices are stalling at $1,232 for now. Besides, on the chart view there is a strong convergence (resistance) at fibonacci 0.618 levels around $1,232/38 levels. The 1.618 extension of the counter trend rally is converging at 0.618 resistance of the primary drop. This could prove to be a very important level for Gold to reverse lower again. A clear 5-wave rally is still absent now and hence probabilities remain for a bearish reversal pushing prices below $1195 levels before rallying further. Please refrain from taking long positions from here, in fact selling around $1,237 levels could be a good strategy. Immediate resistance is seen at $1,237, while support is at $1,195 respectively.
Please remain flat for now. Look to sell around $1,237 levels, with risk at $1,247, targeting $1,175
On the US dollar front, the University of Michigan Confidence Report is due at 10:30 AM EST, which should be positive for the USD. Also note that overall USD strength remains intact for now. We shall update if there is any change to this structure.
The material has been provided by InstaForex Company – www.instaforex.com