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AUD/USD, EUR/USD and gold hit important resistance levels

Jason Sen
AUD/USD’s reversal last week, just below the 200-week moving average at 8000/8010, is a warning to bulls. This remains the main challenge for bulls this week in overbought conditions.
It could be worth trying short positions on a re-test with stops above 8050. Risks increase to the downside as we test first support at 7894/90. But eventually this is likely to break, targeting 7875/73 and strong support at 7845/40.
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This is the last line of defence for bulls so a bounce from here is likely on the first test. Try long positions with stops below 7810. A break lower, however, is another sell signal, initially targeting 7788/85.
EUR/USD bulls are starting to hit some selling pressure as we approach the 2015 high at 1.1701/11. We are in a big two-and-a-half-year sideways trend and this is the upper limit in severely overbought conditions.
In fact the 1.1710/1.1740 area encompasses important longer-term Fibonacci resistance. If you think the seven-month recovery is overdone (as I do) this is the area to try short positions, with stops above the 500-week moving average at 1.1800.
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We generated a minor sell signal on Monday, for which we’ve been waiting for a few days. We tested minor support at 1.1650/40 but we overran by 16 pips. There is stronger seven-week trendline support at 1.1599/95, which is likely to hold the downside on the first test.
Bulls will not just roll over and let bears take control without a battle. Try long positions with stops below 1.1565. A break lower eventually, however, is a sell signal. This targets minor support at 1.1550/45 and strong support at 1.1490/85 for a buying opportunity.
Gold has been in one big sideways trend for most of this year but the failed test of resistance at 1260/61 signals the bear trend will now resume. If we are lucky enough to get close to 1259/61 today, exit long positions and try shorts with stops above 1266. An unexpected break higher, however, would target 1272/73.
Having stopped just short of the 1260/61 resistance, we hit the first target of 1253. If we continue lower look for 1250 then good support at 1247/45.
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A bounce from here is likely on the first test as bulls try to maintain the two-week recovery. But the profit potential on long positions may only be up to the low/mid-1250 area. Further losses target the best support for today at 1239/38. Try long positions with stops below 1233.
I wrote about the US Dollar Index last week, suggesting the dollar had further to fall and could target a six-and-a-half-month trendline, now at 93.30/20. We are closing in on this target and are severely oversold on the daily chart now.
A bounce just above this level would not surprise at this stage. This would tie in nicely with the important resistance levels for the markets mentioned above.
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Only a sustained break below the longer-term 23.6% Fibonacci support at 92.88 signals continued losses. I favour a bounce from the area above 93.30/20, at least in the short term.

Jason Sen

Technical Analyst & Trader
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The content of this article is the personal opinion of the author and not Intertrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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