European Open Powell talks of Inflection Point for US Economy

The DAX has remain firm and just below its record high, as a shallow retracement occurred last week. Price action has not quite closed the gap support level, but the fact it remains untested could be taken as a bullish sign.

However, with the German Federal government looking to have more control over a nationwide lockdown, perhaps it could knock this bullish DAX off of its perch if harsher conditions are indeed implemented.

• Whilst volatility remains low then retracements towards 15,110 support are likely to be snapped up by bulls.
• A break above 15,312 assumes bullish continuation of its dominant trend.
• A convincing break below 15,110 signals counter-trend phase has begun. And this might happen quite quickly if large stop are resting below this technical level.  

Forex: Dollar index remains in a 0.5 point range

The US dollar index (DXY) held above 92.00 support last week and printed am inverted hammer on Friday. Note that DXY spent the entre week between 92.00 and 92.50 so, until we see a break out of this range, we may find price action to be on the choppy side.

• The British pound suffered broad losses last week, in particular against the Swiss franc and Japanese yen. Both GBP/CHF and GBP/JPY are trading within Friday’s range, but struggling to garner much bullish interest. Yet whilst their trends point lower their reward to risk ratios are less appealing to bears around current levels.
• GBP/USD closed lower every day last week and is trying to build support above the March low. A break beneath of which brings the 1.3600 handle into focus, but if it holds support then the 50-day eMA (which sits just below 1.3800) is the next resistance level on the daily chart.
• EUR/GBP closed at a 6-week high on Friday, although bullish momentum is waning on the intraday charts and Friday produced an indecision candle (Spinning Top Doji). But it is above its 50-day eMA so if prices remain above 0.8645 (Friday’s low and a pivotal level) then bulls could target resistance around 0.830.
• EUR/NZD didn’t quite reach our 1.7000 target but two bullish hammer on the four-hour chart suggest support is around 1.6840/66.
• CAD/JPY has retraced to Thursday’s hammer high during overnight trade. If prices can now build support around 87.20 and break above Friday’s high, the bias is then for a run towards the 88.30 high. See today’s Asian open report for the chart:

Commodities: Gold is down, but not out

Gold is slightly lower by -0.3% and trades around 1738. It found resistance at 1760 on Friday and could potentially provide a deeper correction, given the 50-day eMA also capped as resistance. However, an hourly bullish spike shows demand at 1731.15, so we see potential for a minor bounce (at least) from this level should it be tested. A break below 1730 brings 1720 into focus. 

Copper prices are back below $4.00 and closed the upside gap created when it broke out of a symmetrical triangle on the daily chart, invalidating the bullish bias.

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