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The common European currency has reached the upper boundary of a large-scale triangle against the British Pound.

As shown on the chart, the currency exchange rate has formed a flag. The pair tested the upper boundary of a rectangle and retraced south.

As for near future, traders should look for opportunities to trade in either direction once there is a breakout from the rectangle. In addition, technical indicators suggest that the EUR/GBP pair could decline further.

The British Pound has been losing strength against the New Zealand Dollar after hitting the upper boundary of the channel down early December, 2017. The currency pair has formed a triangle during this period.

After reaching the 61.50% Fibonacci retracement level, the GBP/NZD pair began to surge, however, the 200– hour simple moving average is restricting the price movement north. This retracement can be measured by the low at 1.8948 and the high at 1.9467.

During the next trading days, the currency exchange rate could decline further; however, this decline might be stopped by the weekly PP at 1.8873.

Contrary to expectations, the Euro managed to maintain its strong upward momentum during the previous session and climb to a three-year high of 1.2550 by Friday morning. This marks a 85 pip advance against the US Dollar in two days and 280 pip rise from the beginning of this trading week.

It is expected that the current bullish sentiment could continue early next week, as well. However, the high positioning of technical indicators suggests that some bearish correction should occur in order for the pair to build up the necessary momentum and overcome the aforementioned high.

The nearest resistance is set by the weekly R1 and the 61.8% Fibo retracement (2014 high of 1.40 and 2016 low of 1.04) near the 1.26 mark. Meanwhile, daily low should be the 200-hour SMA at 1.2350.

The Sterling continues to advance against the US Dollar for the second consecutive day, driven by weaker US Dollar in the global market. The rate hindered slightly near the weekly R1 at 1.4065 on Thursday, but nevertheless gained the necessary momentum to reach a new two-week high of 1.4150 this morning.

It seems that the Pound might be due for further gains, especially if no resistance is limiting it until the 1.43 mark where the weekly R2 and the highest level since the Brexit vote are located. This advance, however, might come after a brief correction southwards.

A possible point of reversal could be the monthly PP and the 55-hour SMA at 1.40, while a strong bearish sentiment should send the rate for a test of the 100– and 200-hour SMAs and the weekly PP at 1.3940.

Bears have managed to take advantage of the weaker US Dollar, thus pushing USD/JPY to a new 2017/2018 low of 105.65. As a result, the pair was testing the weekly S3 and the lower boundary of two prevailing two-month channel on Friday morning.

Technical indicators suggest that the current movement south could prevail today, as well, thus sending the pair for a test of the senior channel circa 104.75. Given that the weekly S3 and the monthly S2 are located along the way, this decline might be limited to 105.00. Meanwhile, resistance is provided by the 55– and 100-hour SMAs, the weekly S2 and the monthly S1 in the 106.70/107.50 territory.

If US Building Permits released at 1330GMT do not introduce massive volatility in the market, the pair could trade sideways in this session.

Following the massive hourly advance mid-Wednesday, the yellow metal has made no significant changes to its price level, thus remaining in the 1,350.00/1,360.00 range ever since. If looking at the chart, the pair has been moving neatly along the bottom boundary of the breached two-month channel.

Technical indicators demonstrate that Gold has still some upside potential that could be realised today. However, the commodity was reluctant to push higher during the previous session. Thus, gains could also be limited today, especially if taking into account the fact that the pair is located near the 2017/2018 high of 1,365.00.

It is likely that US Building Permits released at 1330GMT introduce some volatility in the market; however, Gold should maintain its trading range between 1,365.00 and 1,335.00.

The Euro continued the trend against the Greenback, inspite of the US producer prices showing its forecasted growth in January. The EUR/USD pair went up by 17 pips or 0.13% to been seen trading at 1.2483.

The Labour Department revealed that the US Producer Price Index climbed 0.4% in January, as forecasted. Data backed-up its growth rate with a strong increase in health care and gasoline prices, which moved up 0.7% and 7.1%, respectively. The PPI report fuelled expectations that price growth would accelerate in 2018 even with weaker correlation with inflation of consumer prices. Inflation is likely to be lifted towards the Fed's 2% target, owing to tightening job market, weak US Dollar, as well as larger government spending and tax reform

The Aussie fell against the Greenback as the Australian labour market report showed slightly better than anticipated data. The AUD/USD exchange rate declined 0.18% or 14 base points to the 0.7914 mark, but managed to return into the 0.7960 area.

The Australian Bureau of Statistics stated that the Australia's economy added 16.0K positions in January, surpassing forecasts for a 15.3K gain. The country's unemployment rate decreased to 5.5% in the reported month, meeting the forecast. The report confirmed that the labour market remained in good shape, as businesses were keen to hire, while people were looking for a job. Thus, the RBA is unlikely to raise rates in the near term, owing to weaker inflationary pressures.

Cryptos are finally recovering, what about another rally?

During the last few weeks, both investors and media have put aside cryptocurrencies to focus on traditional markets. This came quite naturally as equities suffered a substantial sell-off and volatility exploded. Meanwhile in the crypto market, it was the time of consolidation. Indeed, after a rocky start into the year, Bitcoin and its peers finally took a breather and stopped free-falling. In fact, the crypto market has even started to recover recently. After falling as low as $276 billion, the total market capitalisation bounced back to around $481bn this week as the price of Bitcoin crossed the $10,000 threshold to the upside.

We are definitely positive regarding the outlook for cryptocurrencies. This year will be key for this new asset class as several teams behind crypto projects are expected to deliver either beta version or final product. Even though we believe the positive momentum initiated a couple of weeks will continue, one may have to wait for the Chine New Year to end before seeing an acceleration. Now is therefore the good time to make the final adjustment to your portfolio before the next rally.

Don't bet with the bears

The world's largest hedge fund, Bridgewater, is reportedly shorting a selection of European blue chips to the tune of $18 billion. Should European equity investors be nervous?

No. The recent sell-off lacks the fundamentals of a sustained correction. The US Federal Reserve Bank's monetary tightening and the consequent rise in US yields has been well telegraphed. Higher inflation, unless it goes parabolic, is unlikely to surprise traders. The age of innocence is over on Wall Street, traders will become more vigilant, but that doesn't necessarily mean the end of the historic bull-run. The upcoming Purchasing Managers Index for February will prove the strength of Europe's cyclical upswing.

Goodbye Zuma, hello growth

South Africa's JSE 40 Index will expand more rapidly as President Jacob Zuma steps down, following a 9-year rule marked by corruption, pork-barrelling and incompetence. Successor President Cyril Ramaphosa, former African National Congress (ANC) party leader, is expected to drain the swamp, starting with an address to the nation today.

Investors are looking at a stronger rand (USD/ZAR at 11.58) along with higher equities: the JSE 40 reached 52'565 points (+4.27%), reinforced by Industrials (+10.44%), Consumer Discretionary (+8.01%), Financials (+6.69%) and Health Care (+6.59%). With December 2017 consumer prices up 4.7% annually, inflation is subdued. January 2018 Business Confidence increased to 99.7 from December's 96.4 – its highest since 31 October 2015. December's trade balance was ZAR 15.7 billion, suggesting a strong economic recovery.

WTI rose further on Friday, extending recovery from $58.06 higher base, driven by weaker dollar and renewed optimism over OPEC-led efforts to stabilize oil markets on global production cut.

Oil price maintains bullish stance which was boosted by recent comments from Saudi Arabia which confirmed its strong commitment to stick to existing output reduction program which includes world’s major oil producers and was reinforced by comments from UAE energy minister who said that oil producers led by Saudi Arabia and Russia aim to draft agreement on a long-term alliance to cut oil production by the end of the year.

Thursday’s extension and close above $61.34 (Fibo 61.8% of $66.64/$58.06 fall) was bullish signal, but mixed setup of daily MA’s; overbought slow stochastic and weak momentum weigh and warn of recovery stall despite firmly bullish sentiment.

However, near-term action remains underpinned by rising daily cloud (cloud top lies at $61.28 and marks initial and significant support) with bullish outlook to remain in play while cloud top holds.

In addition, WTI contract is on track for strong bullish weekly close after suffering heavy losses in past two weeks, which is bullish signal and will be reinforced by weekly close above $61.34 Fibo barrier.

Extension through next barrier at $62.35 (daily Kijun-sen) will be bullish signal, while return and close below cloud top could be negative signal of recovery stall and fresh weakness.

Res: 61.87; 62.35; 62.83; 63.36
Sup: 61.28; 61.09; 60.81; 60.08