Technical Market Insight: Week Ending 10 November

The Dollar Index: Active Support

According to the US Dollar Index, the buck wrapped up the week down -1.4%, closing on lows and recording its most significant one-week decline since July. The move wiped October’s gains off the board and chipped into September’s +2.5% run.

The technical structure on the monthly chart, however, remains unaffected. The long-term trend is still to the upside, and support and resistance call for attention at 99.67 and 109.33, respectively. Consequently, while the index exhibits scope to continue exploring higher, room to retest 99.67 is undoubtedly on the table. For those who monitor the Relative Strength Index (RSI), the momentum oscillator indicates positive momentum (> 50.00).

This is where it gets interesting.

Price movement on the daily timeframe shows the index concluded the week connecting with support at 105.04. Alongside another layer of neighbouring support at 104.42, these two levels will be key to monitor this week. Why? In addition to the longer-term trend pointing north on the monthly scale and the daily timeframe’s trend holding higher, we can see that each of the aforementioned support levels are accompanied by AB=CD harmonic confluence.

Support at 105.04 is joined by an equivalent AB=CD formation at 105.17 (100% projection ratio), and support at 104.42 is complemented by a 1.272% Fibonacci projection ratio at 104.62: an ‘alternate’ AB=CD formation. So, while the daily chart’s RSI signals negative momentum (< 50.00) and Friday’s selloff had price pencil in a lower low, the two daily support levels should not be overlooked this week as a potential technical floor.

EUR/USD: Bullish Trend Reversal?

Printing its largest one-week gain since July, Europe’s single currency settled last week in positive territory against its US counterpart (+1.6%).

Longer-term trend studies on the monthly scale reveal that the currency pair has remained bearish since 2008, though support from $1.0516 is proving a difficult barrier to overcome. The test of the aforementioned level came about following a rejection from resistance at $1.1233 in July (and the 50-month simple moving average at $1.1151).

The rebound from monthly support has seen an early uptrend unfold on the daily timeframe, not only engulfing trendline resistance taken from the high of $1.1276 but also overthrowing the 50-day simple moving average at $1.0637 and resistance from 1.0699 (now marked support). Technical headwinds north of the noted barriers are limited until the 200-day simple moving average at $1.0806, closely shadowed by resistance at $1.0843.

As a result, EUR/USD bulls could remain on the offensive in the medium term until daily resistance at $1.0843. However, at this point, longer-term sell-on-rally scenarios may come into play based on the longer-term trend direction.

Monthly Chart:

Daily Chart:

S&P 500: Breakout Buying?

You may recall the following points from last week’s technical research (italics):

Considering the current chart studies, bears may have difficulty at current levels given we have monthly and daily support levels in play. Hence, this may trigger a bout of profit-taking this week, which could draw the index back to retest weekly resistance at 4,177.

Although monthly support from 4,102 was left unchallenged, daily support made it into the fight at 4,104. Up +5.9% last week (the most significant one-week advance this year), buyers staged a strong rebound from the support area.

The monthly timeframe—entrenched within a longer-term uptrend—is now eyeing a run to the 4,607 top printed in July, which shares chart space near weekly resistance at 4,595. Technically speaking, the weekly timeframe is still trending lower, but this could change following a higher low and subsequent higher high.

As a note, the Relative Strength Index (RSI) is now in positive territory (> 50.00) on the monthly and weekly timeframes.

On the daily chart, the week settled closing above the 200-day and 50-day simple moving averages at 4,247 and 4,347, respectively, and challenged resistance at 4,363.

Looking ahead, for bulls to remain at the wheel this week, technicians will want to observe a dominant close beyond 4,363. Not only would this help reaffirm the bullish perspective, but it may open the door to breakout buying opportunities towards resistance on the daily timeframe at 4,473. Conservative traders may seek a retest of 4,363 before committing, yet more aggressive traders could simply elect to enter on a bullish close north of current resistance. Should sellers attempt to make a show from resistance in early trade, the 50-day simple moving average may serve as dynamic support for price to rechallenge the resistance level.

WTI Oil: AB=CD Support Calling?

The price of WTI oil finished another week on the ropes, down -5.0%.

The technical confluence between $75.39 and $76.62 is substantial on the daily timeframe this week, an area that may deserve a spot on the watchlist. The zone is made up of two support levels at $75.39 and $76.62, which define the external boundaries; additional confluence is seen through an equivalent AB=CD harmonic support pattern, a 1.618% Fibonacci extension ratio and a 61.8% Fibonacci retracement ratio.

As a result of this and the lack of support evident on the daily chart until the noted confluence area, bears will likely remain in control for the time being in this market. Should a rally unfold this week, nevertheless, traders may welcome resistance at $85.20 as a potential base for shorts, still targeting the aforementioned support area.

Spot Gold (XAU/USD): $2,000 is Key This Week

For those who read last week’s Technical Market Insight for spot gold (XAU/USD), you may recall the following (italics):

Essentially, the technical landscape leans toward additional buying towards resistance on the daily timeframe at $2,035 and nearby resistance on the weekly scale at $2,049.

You can see that from the weekly and daily timeframes, support is at $1,969 and $1,975, respectively. Both levels remain in the fight this week, and weekly and daily resistances also warrant attention at $2,049 and $2,035, respectively. Thus, given the daily timeframe demonstrating an active uptrend and the Relative Strength Index (RSI) indicating positive momentum on the weekly timeframe (> 50.00), further outperformance could be seen for the price of gold this week despite last week’s moderate correction.

This analysis throws light on the widely watched $2,000 level this week. As you can see, the level has withstood a couple of upside attempts in recent trading, though buyers have yet been unable to absorb offers at the base. A dominant daily close above $2,000 this week, therefore, is likely to be a talking point and would, in light of room to scale higher on the weekly and daily timeframes, perhaps encourage buying towards at least daily resistance at $2,035.

Weekly Chart:

Daily Chart:

BTC/USD: It’s All about H1 Structure

Upside momentum slowed considerably for BTC/USD last week after engaging with resistance on the weekly timeframe at $35,060. Technically, the trend is north, but according to the weekly chart’s Relative Strength Index (RSI), the major cryptocurrency is overbought. Air space beyond the current resistance exposes resistance at $38,523, a level complemented by a channel resistance taken from the high of $31,050.

$35,060, therefore, is a pivotal level to watch this week.

Drilling down to the daily timeframe, support at $34,048 refused to yield in recent movement. Unlike the weekly scale, there is scope to continue navigating higher price levels on the daily chart until resistance at $36,361. This is underpinned by a Golden Cross, a long-term bullish trend signal involving the 50-day simple moving average ($29,245) crossing above the 200-day simple moving average ($28,366). Against this backdrop, however, you will note that the RSI on the daily timeframe has displayed early signs of negative divergence (average gains are beginning to slow versus average losses) just south of indicator resistance at 89.35.

Meanwhile, short-term price action out of the H1 timeframe works with support and resistance at $34,003 and $35,048, respectively, and an ascending support line extended from the low of $33,000.

In view of the analysis, in support of a pullback this week, sellers are reinforced by weekly resistance at $35,060 and overbought conditions on the weekly and daily charts (RSI). On the other hand, buyers are buoyed by the uptrend visible on the weekly and daily timeframes, the Golden Cross and support from the daily chart at $34,048. Therefore, technical studies appear to display a balance between buyers and sellers right now, and some traders may interpret this as a signal to sit on their hands for now and let the H1 timeframe decide: should price breakout above resistance at $35,048, this helps validate a bullish vibe, while a breakout below support at $34,003 could be sufficient to consider a bearish scenario.

Charts: TradingView

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