Mid-Week Technical Outlook: Market Gems & Jewels

Global stocks struggled for direction on Wednesday as investors focused on the US midterm election results.

Republicans and Democrats remain in a tight race for control but Republicans appear on course to win a majority in the House of Representatives with 198 seats as of writing. However, the Senate fight is too close to call. The growing anticipation and tension from the US midterms have left market players cautious – stimulating some appetite for safe-haven assets. The dollar edged higher as risk sentiment took a hit while sterling slipped back below 1.1500. Looking at commodities, gold remains above $1700 while oil has found itself back under $95. Things could turn volatile for financial markets over the next few days thanks to the US inflation report and other key reports from major economies. When volatility strikes, this presents potential trading opportunities and there are a couple of gems hidden under all the noise.

USD Index breakdown on horizon?

The FXTM Equally-weighted USD Index remains under pressure with prices wobbling around 1.2400 as of writing. There have been consistently lower lows and lower highs in the H4 timeframe with prices trading below the 50,100 and 200 SMA. Sustained weakness below 1.2400 could trigger a selloff towards 1.2340 and 1.2300, respectively. A move back above 1.2400 may open a path towards 1.2650.

EURUSD tests strong resistance

After pushing back above parity earlier this week, the EURUSD has found itself trapped within another range with resistance at 1.0100 and support at 1.0000. Given how prices are trading above the 50 and 100 SMA coupled with the fact that the MACD is trading above zero, bulls have some control. A strong move above 1.0100 could spark an incline towards 1.0190. Should 1.0100 prove to be strong resistance, the EURUSD may retest parity.

GBPUSD waits for fresh spark

If one word comes to mind when looking at the GBPUSD, it will be “noisy”. The currency pair is pretty choppy and trapped within multiple layers of support and resistance. Bulls or bears need to breakout of this noisy region for the GBPUSD to push higher or lower. A strong move above 1.1500 may trigger an incline towards 1.1600, 1.1750, and 1.1850, respectively. A breakdown under 1.1400 could open a path towards 1.1200.

USDJPY wobbles above 145.00

After creating consistently higher highs and higher lows, the USDJPY bullish trend could be coming to an end in the daily timeframe. Prices are trading above the 50-day SMA which is where the 145.00 support level resides. A strong breakdown below this level could encourage a selloff towards 142.00 and 139.50, respectively. Another rebound from 145.00 is seen opening a path back to 149.00.

S&P 500 respecting bearish channel

A picture says 1000 words. Much can be said for the S&P 500 on the weekly timeframe which continues to respect a bearish channel. There have been consistently lower lows and lower highs on the weekly charts while the MACD trades lower. Prices may test 3650.0 which is just above the 200-week SMA. A breakdown and weekly close under this point may trigger a further decline towards 3450.   

EURUSD GBPUSD USDJPY DXY S&P500