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16/05/2014: Trading outlook ahead of the US session


Any prospective technical rally that may have been seen this morning seems to have been short-lived as market sentiment has once more begun to deteriorate, with equity indices and forex pairs falling away again. Traders will be focusing now on the US housing data with Building Permits and Housing Starts both due at 13:30BST, while the Michigan consumer sentiment at 14:55BST will also be of interest.

It still seems as though selling EUR/USD into strength is the way to go. The series of lower highs and momentum indicators in bearish configuration back up this outlook. There is now resistance in the $1.3700/$1.3730 range would be a good area to sell for at least a retest of yesterday’s low at $1.3647.

GBP/USD is more resilient than the Euro still and this is shown in the 13 pip gain today. Sterling is more of a near term corrective sell than a medium term sell such as the Euro. Again a series of lower highs suggests selling into strength with the resistance band $1.6810/$1.6830 a good chance to sell. The breakdown of the top pattern implies a correction to $1.6660.

USD/JPY is again on the way lower and looks to be putting pressure on 101.31 again. Any rally into the 101.70 area would be a near term chance to sell.

Gold  is having another day of consolidation and has made little intent on a move either way. The price is almost exactly mid-range $1276.60 to $1315.60 and is subsequently very difficult to call near term. Suggest standing aside for now.

The DAX consolidated early in the European session but has since come under further selling pressure. The big bearish key one day reversal on the daily chart suggests the sellers are in control for now. There is a band of resistance 9760/9790 which could be a good area to sell. The FTSE 100 has also drifted further lower off the top and looks to be confirming the corrective outlook. Look to use near term rallies as a chance to sell.


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