Despite the fall of the price in the beginning of the week, the euro is still trading in the consolidation between the resistance 1.1268 – 1.1279 and the local minimum 1.1140. The fall of the pair was pretty sharp, but was not supported by large volume, so we are unable to highlight any new levels or zones.
So our previous scenario remains the same: we need to wait for the exit of the price from the range. Given the fresh fall of the pair and the presence of the strong resistance, we should consider opening short positions after the breakdown of the level 1.1140. The move should be supported by large volume. A stop loss should be placed above the breakout volume bar. A potential of the deal is around 80 pips.
The pound also fell down on Monday, but is still trading in the consolidation. The fall was on small volume, so we are unable to point out any new levels or zones. So our previous scenario for the pound remains actual, we should wait for the exit of the price from the range and a beginning of the local trend. Until that we should better stay out of the market.
Our forecast for this instrument was confirmed as the price grew up after the creation of the support 110.70. Now the situation for trading is a bit complicated, because the price has gone to far away from the level of support and if we enter the market now, the stop loss will be very large. That’s why we need to wait for the smooth downward correction and then we can open long positions. A stop loss should be placed under the level 110.60. The target is 112.00.
USD/CAD is trading in the local consolidation a bit above the level of support 1.3167 – 1.3191, which contains huge volume. Also we need to highlight a presence of the downtrend for this instrument.
So we can expect the test and the breakdown of the support. If the price breaks it down strongly, we can consider opening short position. A stop loss should be placed above the breakout volume bar. A potential of the deal is, at least, 100 pips.
The situation for the Australian dollar remains the same: the price is trading in the consolidation under the resistance level 0.7629. Pretty huge volume is concentrated in this range, so an exit of the price from it will be a good signal for beginning of the local trend. Given the presence of the global uptrend, the breakout of the higher boundary is the most likely scenario.
The move should be on increased volume. A stop loss should be placed below the breakout volume bar. A potential of the deal is around 70-80 pips.
Gold continued its downward movement and broke down the previous support level/lower limit of the consolidation 1251.90 on increased volume. It should also be noted that this movement was confident and the price was fixed below the previous low. This is an excellent signal for continuing the bearish trend on this instrument.
Given all of the above factors, we should work exclusively on sales for gold. Open short positions are necessary after a small and smooth correction of the price in order to obtain a more advantageous entry point. Stop loss is desirable to put the upper limit of the previous local consolidation – 1257.00, in order to protect themselves from false removals. The potential of the deal is about 100-110 points. Thus, the risk / profit ratio will be at the level of 1 to 2, which is an acceptable indicator.
The sentiment: the mood of the market confirms 3 our scenarios: USD/JPY, USD/CAD, AUD/USD. The situation for gold is near 50/50 so we should watch for further changes. As for the euro and the pounds, this indicator is still showing the priority of long positions, but technical factors are contrary, so we should be extremely careful trading these pairs.
The bottom line: XAU/USD are in priority today. Also if the yen corrects we can enter the market.