Gold – Drops Sharply Below $1200

Gold for Friday, October 31, 2014
In the last week gold has resumed the medium term down trend falling from above $1250 back down through the key $1240 level and down below $1200 in recent hours. A couple of weeks ago Gold ran into the previous key level at $1240, however it also managed to surge higher to a five week high at $1255 early last week. In the last few days to finish last week however it fell strongly back down below the $1240 level and to near $1226 before rallying a little higher and steadying around the $1230 level. In the last 48 hours it has fallen strongly. After enjoying some solid support at $1215 for a couple of weeks, gold dropped to its lowest level in 2014 near $1180 earlier this month.

The next obvious level of potential support remains at $1200 which is a long term key level, and where gold is presently trading. Several weeks ago Gold was enjoying a resurgence as it moved strongly higher off the support level at $1275, however it then ran into resistance at $1290. In the week prior, Gold had been falling lower back towards the medium term support level at $1290 however to finish out last week it fell sharply down to the previous key level at $1275. During the second half of June, gold steadily moved higher but showed numerous incidents of indecision with its multiple doji candlestick patterns on the daily chart. This happened around $1320 and $1330. The OANDA long position ratio for Gold has moved back to above 65% as gold has fallen back down through the $1240 level.

At the beginning of June, gold did very well to repair some damage and return to the key $1275 level, then it has continued …read more

USDJPY Presses Resistance Ahead of BoJ- Support at 108.87

A weekly opening range break shifted our focus to the topside with the rally now at risk below key resistance. Here are the updated targets & invalidation levels.

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Move lower in EURAUD could cause major losses

The EURAUD pair has been moving lower over the past two weeks. However, with a potential head and shoulders formation in play, just the completion of the second shoulder could be enough for a 500 pip move in the pair.

The weekly chart below shows that the pair appears to be within the second shoulder of a head and shoulder formation, coming at the top of a uptrend dating back to mid-2012. Using a equidistant channel, it is clear that the neckline also shares the same slope as the tops of shoulders, providing a greater conformity to the pattern. Using the stochastic oscillator, the move lower seen in the past week and a half clearly could have more to go. Meanwhile, the MACD histogram is approaching the 0 mark and thus the downward trajectory provides a bearish bias. The major level I am looking for as an activation point of a bearish bias is at 1.4309, which clearly has a historical significance given the spikes seen around hat area back in 2011. On the daily chart, the 1.4309 level is clearly a major level of near term support and has been accompanied by the 50 day SMA which provides yet more support. Thus, should the price close below 1.4309 on the daily chart, I would expect to see a return back to the neckline and recent major low of 1.3789. Near term support prior to the would be likely around the 50% fibonacci retracement of 1.3715.301014e

About Joshua Mahony

josh mahonyJoshua Mahony is Research Analyst at Alpari UK. Having joined in 2012, Josh’s previous experience in the industry includes time spent on the trading floor at Barclays Capital and working for Deutsche Bank in New York for a year. …read more

Dollar Surges as FOMC Ends Quantitative Easing

The US Federal Reserve ended its Quantitative Easing program and struck a fairly positive tone on future policy. Here’s how we covered the Dollar reaction in realtime.
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Leading Indicators Point To Continued Japanese Weakness

Although Japan had a 6% GDP growth rate in the first quarter, much of this was attributed to a sales tax hike pulling sales forward — a thesis that was confirmed by the 7.1% contraction in the second quarter. Since then, economic numbers have been weak, most notably the decline in industrial production. Two independent LEIs – one from the conference board and lone from the OECD – point to continued weakness.

Let’s start with the conference Board’s number:

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XE Market Analysis: Asia – Oct 28, 2014

The dollar slipped after a particularly weak durable goods report, and ultimately stayed down versus the European majors, though showed some resiliency against the yen. Yields bounced from lows after a better consumer confidence outcome, which kept equities on the rise. EUR-USD rallied over 1.2760 early, thought turned sideways in afternoon trade, traversing either side of 1.2740. USD-JPY fell to 107.70 lows from over 108.10, though managed to reclaim the 108 handle in light dealings.

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Gold – Drifts Lower Below $1230

Gold for Tuesday, October 28, 2014
Over the last couple of weeks Gold has ran into the previous key level at $1240, however it also managed to surge higher to a five week high at $1255 early last week. In the last few days to finish last week however it fell strongly back down below the $1240 level and to near $1226 before rallying a little higher. For the last several weeks Gold has enjoyed solid support at $1215 after falling strongly a couple of few ago from $1240 to just below $1215, however a few weeks ago it dropped to its lowest level in 2014 near $1180. It will be interesting to see whether the support level at $1215 can be called upon again and provide some much needed support to gold to stop it falling back down below $1200 again.

The next obvious level of potential support remains at $1200 which is a long term key level, should gold retrace again. Several weeks ago Gold was enjoying a resurgence as it moved strongly higher off the support level at $1275, however it then ran into resistance at $1290. In the week prior, Gold had been falling lower back towards the medium term support level at $1290 however to finish out last week it fell sharply down to the previous key level at $1275. During the second half of June, gold steadily moved higher but showed numerous incidents of indecision with its multiple doji candlestick patterns on the daily chart. This happened around $1320 and $1330. The OANDA long position ratio for Gold has moved back to above 65% as gold has fallen back down through the $1240 level.

At the beginning of June, gold did very well to repair some damage and return to the key $1275 level, then …read more

Keeping Eye on Yen as Reversal May Offer Trade Opportunities

Uncertainty reigns supreme on a potentially critical week for the US Dollar and Japanese Yen. What trades are we watching?

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Stress test results and new Ebola case hit risk appetite

  • Market jitters continues as investors panic on reports of new Ebola case in the US;
  • EU bank stress test results this weekend may prompt some risk aversion today;
  • UK seen posting another strong growth reading;
  • German consumer confidence expected to fall to nine month low.

The markets look set to end the week on a slightly more downbeat note, with European indices seen opening around half a percentage point lower, tracking moves in the US overnight where indices pulled back late in the session, apparently in response to reports of a new Ebola case in New York.

As I’ve said repeatedly in the last couple of weeks, I am not convinced in the slightest that these market moves reflect investor concerns over the spread of Ebola. Market jitters reflect the fact that investors are on edge at the moment and the spread of Ebola is just an excuse. That’s not to say we didn’t see profit taking yesterday shortly after these reports emerged, what it does say is that investors are looking for any reason to get out of their long positions, or even short the market, which is concerning.

The fact of the matter is, only one person in the US has died from Ebola and therefore any genuine market panic attributed to it spreading is just nonsense in my opinion. As far as I’m concerned, the fact that we’ve retraced around two thirds of the move from September highs to last week’s lows and run into technical resistance around the 100-day SMA in the S&P 500 better explains the profit taking.

One more thing that could explain a more cautious approach from traders today is the fact that results from the bank stress tests are due to be released over the weekend which could have a massive impact on next week’s opening levels. …read more

Bitcoin Undecided, Next Move to Determine Direction

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It’s been almost 24 hours since our last update and bitcoin is still battling with the $350 figure. In the early part of today’s trading session the bears made another move to try and clear out the $345-$350 support area but only managed to get prices to a low of $344 before retracting. The subsequent rebound took BTC/USD to a daily high of $358.45. In the last few hours however those gains fizzled out and bitcoin is back to hovering just above the $350 mark.

The two points to keep an eye on are $337 on the downside and $362 on the upside. If prices break below $337 the first potential support can be found near the $300 round figure. This is followed by another support at the October 5th swing low at $285. Lower still, the $266 figure will be strong support for bitcoin. On the top end, BTC/USD will need to climb and stay above $362 to signal an end to the recent losses.

Coindesk has an excellent article on traders entering the cryptocurrency arena. The article quotes several ex-institutional traders like Arthur Hayes for Citi. Hayes says that you can make a lot of money trading in bitcoin because the market still has a lot of inefficiencies. The major reason why traders jump into bitcoin trading is the low volatility environment elsewhere.

This is similar to my experience. I come from forex trading (although not on the institution side) and in the last few years the low volatility has made it harder and harder to make money. Bitcoin trading has a lot of disadvantages like higher trading costs and the possibility of losing your entire trading account if an exchange goes down (see <a class="colorbox" …read more