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EURUSD - A Larger Retracement to Come?The euro has given back some of its gains against the dollar over the last week, after rallying strongly to break out a descending channel over a couple of weeks prior. Today the pullback entered into interesting territory, between the 50 and 61.8 fib levels, where already it is finding some support. That area also coincides with the top of the channel it has just broken through. It should be an interesting test for the pair. On the one hand, a 38.2% retracement of the longer-term decline - May highs to August lows on daily chart - would be very shallow and the rotation off that earlier mentioned support may suggest there's more to come. On the other, a break below the 61.8% level and channel high on the 4-hour chart would be a major blow to the euro recovery and could point to further pain to come. The strength of the rebound combined with where it occurred may indicate the former looks more likely. With so much US data to come this week and the recent trend being soft, that may get a helping hand. The flipside to this is that Fed policymakers prior to the blackout period remained committed to the taper, which may limit the downside potential, and a few positive data surprises this week could see the dollar quickly find itself back in favour.
by OANDA
1
GBP/USD - A Strong Barrier of ResistanceThe dollar has come under pressure over the last couple of weeks as the economic data has necessitated a more dovish line from the Federal Reserve. The result is that, despite breaking below the 200/233-day SMA and into bearish territory, the pair has failed to gain much traction to the downside. We'll soon see whether that failure is temporary or more prolonged, with the pair now testing the upper end of that band from below. This also coincides with the 55-day SMA and the 38.2% retracement level of the June highs to July lows. On the 4-hour chart, this also coincides with the 200/233-period SMA band, so it's no surprise the pair is seeing so much resistance around this area. The rally over the last couple of weeks is seeing momentum slow, as evidenced by the rising wedge - a bearish pattern, and the stochastic and MACD on the 4-hour chart, where divergences are clear. That would suggest a continuation of the move lower is more likely but also that a break above 1.38 could trigger quite a sharp and bullish move higher, with stops above here potentially exacerbating any move. With Fed speakers and US data today and the US jobs report tomorrow, we may not have to wait long to see which it will be.
by OANDA
US Micro-Cap Breaking Out?Here in this position, it is clear that intensive work has gone into supporting the entire global recovery. Moreover, we could already count the resilience in credit as ideal results from the covid siege. But now I want to focus on the US and small caps in particular are getting to work and the advance is leading to a more palpable exhaustion leg and opening some of the wildest trades for 2022 and beyond. You can see this is not the same position in China or Hong Kong. In the short and immediate term, we are witnessing capital rushing to park in US assets as the ONLY alternative. The pressure to park capital in 'safe assets' which are not threatened by the nanny state in the Far-East, Middle-East, Russia and now to a lesser extent Europe while it remains hijacked via Schwab. This more or less exhausts the options that we have and has clearly pinned both the Hang Seng and Shanghai Comp: Sure the "migration of capital" from East to West is underway but the threat of US losing its hegemony is a multi-decade process. I will be looking to fade the highs in US Microcaps from October time to ride profit taking into Q1 2022 before we start chapter two. Interested to gage the interest levels for ETFs here, if there is enough we can start to establish some levels, calls, and invalidation zones for IWC together in the comments.
AMEX:IWCLong
by ridethepig
1