The FTSE 100 continues to show signs of stress and is trading back at lows last seen in April this year after the government confirmed further regional lockdowns yesterday. Nottinghamshire has been moved into tier 3 restrictions, while West Yorkshire will also be placed under the strictest level of rules on Monday. The FTSE is now closing in on the 23.6% Fibonacci retracement of the January 20/March 22 move, underlining the weakness in the index. There has been little in the way of any news flow from the latest round of EU-UK trade talks which continue in Brussels today. The European Commission president Ursula von der Leyden did say that the talks were making good progress but that fisheries and level playing field issues remain, and until these are solved then progress will likely stall. It is expected that UK PM Boris Johnson will meet with Ms. Von der Leyen next week in an effort to break the current gridlock.
EUR/USD’s break of 1.1688 support suggests that recovery from 1.1612 has completed at 1.1880. Corrective fall from 1.2011 is likely resuming. Intraday bias is back on the upside for for 1.1612 support first. break will confirm and target 38.2% retracement of 1.0635 to 1.2011 at 1.1485. On the upside, above 1.1758 minor resistance will mix up the near term outlook and turn intraday bias neutral first.
GBP/USD declines to 1.2920 while heading into Friday’s London open. The pair earlier tried to snap the two-day losing streak while bouncing off 1.2880 to 1.2939. Considering the normal RSI levels, the latest corrective moves may aim for the previous support line stretched from September 23, at 1.2971 now. Until then, a downside break of the 100-day SMA level of 1.2875 can offer immediate support to GBP/USD traders ahead of the monthly low of 1.2819 and then the 1.2800 round-figure.
The US Dollar started a strong decline from well above 105.80 and traded below many important support near 105.00 against the Japanese Yen. USD/JPY might attempt an upside correction, but it is likely to face sellers near 104.50 and 105.00. Looking at the 4-hours chart, the pair followed a bearish pattern from well above 105.80. It broke many bearish continuation patterns and extended its decline below 104.50. The pair also settled well below the 105.00 level, the 100 simple moving average (4-hours), and the 200 simple moving average (4-hours). There is also a crucial bearish trend line forming with resistance near 105.20. The recent low was formed near 104.03 before the pair started an upside correction. On the upside, an initial resistance is near the 104.50 level. The main resistance is near the 105.00 level (the last key breakdown zone). If there is no upside break above 104.50 and 105.00, the pair is likely to resume its decline. On the downside, an initial support is near the 104.00 level, below which USD/JPY could decline towards the 103.20 support.
EUR/JPY remains on the downside at this point. Current fall from 127.07 should now target 61.8% retracement of 114.42 to 127.07 at 119.25, which is close to 119.31 key support. We’d look for strong support there to contain downside to bring rebound. Though, break of 122.89 minor resistance is needed to indicate short term bottoming first. Otherwise, outlook will remain bearish in case of recovery.
From a technical perspective, the AUD/USD pair, so far, has been finding decent support near the key 0.7000 psychological mark. This makes it prudent to wait for some strong follow-through selling before positioning for an extension of the recent pullback from the 0.7155-60 supply zone. The pair might then accelerate the fall further towards the 0.6940-35 region.
USD/CAD stays on the upside at this point and outlook is unchanged. The corrective rebound from 1.2994 is still in progress. Break of 1.3418 will confirm this case and target 100% projection of 1.2994 to 1.3418 from 1.3081 at 1.3505. On the downside, though, break of 1.3225 minor support will mix up the near term outlook again, and turn intraday bias neutral first.
WTI crude oil is now a key focus for the rest of the week. At this point, we’re seeing the price actions form 43.50 as a corrective move. Strong support should be seen at 100% projection of 43.50 to 35.98 from 41.62 at 34.10, which is close to 34.36 structural support, to contain downside. However, sustained break there will argue that down trend has already been developed and would pave the way to 161.8% projection at 29.45, which is below 30 handle.
Technically shows that the yellow metal has managed to recapture powerful resistance at $1872, which is the confluence of the SMA5 four-hour and Fibonacci 161.8% one-week. The next relevant upside barrier awaits at $1883, where the Fibonacci 23.6% one-month lies. Further up, the pivot point one-week S1 is placed at $1887, which could challenge the recovery towards the previous week low of $1895. Alternatively, strong support is aligned at $1860, the convergence of the previous day low and Bollinger Band four-hour Lower. A firm break below the latter could intensify the downside pressure, opening floors for a test of $1850/49 levels. At the point, the pivot point one-week S3 coincides with the September month low.
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