Europe Open: Brent the only winner while currencies and equities face potential pullbacks.

After strong rally during US session yesterday, there appears to be some slight pullback.

EUR/USD H1

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EUR/USD traded mostly flat during Asian hours, with prices kept below H3 1.294 and above support/resistance level 1.292 – a very tight 20 pip range. As we are about to end the week not with a bang, but with a whimper with regards to market moving news, it is difficult to imagine EUR/USD having the ability to break much higher or lower from where we are right now. Bullish momentum will face resistance around H4 level which is around 25th Sep swing high while Bearish movements will potentially be slowed/stopped around H3, which is also close to Channel Top and 1.29 significant pivotal price level.

GBP/USD H1

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A tad more bearish compared to EUR/USD, with rally stopping at H3 level. 1.623 may act as a soft support level as it’s close to the consolidation area/top of US trading session before Asian rally took over a few hours ago.

DAX Futures H1

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Yesterday’s price action didn’t do much considering that price was still trading within Wednesday’s range (an inside day). However bulls may be more concern about the fact that yesterday’s high did not dent the bottom trading ranges before the sell-off on 25th September. Levels to watch out for remains the previous swing low on 26th Sep and bottom of trading range around 7,400.

FTSE100 Futures H1

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Same interpretation of charts as DAX. Inside day – Check, Rally unable to push into previous trading range – Check. Price levels to watch – Similar to Dax’s interpretation – Check.

Brent Crude H1

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50% Fib retracement (High Lows from 14 Sep – 20 Sep, click here for chart) acting as a potential resistance for upside movement. Similarly, 61.8% may act as a strong support that has proven itself twice on 25th Sep (resistance) and 27th Sep (support).

Bottomline:

Equities still look heavy despite the rally yesterday. On the other hand, EUR/USD has really taken off from recent trading range between $108 – $112. A break above $113.0 will bring more confidence to the bulls. GBP/USD is tracking FTSE100’s direction rather well while EUR/USD and DAX showing some slight divergence possibly due to Spain’s new austerity plan.

 

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