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XAUUSD (1227.68): Gold prices broke out from the rising wedge pattern and fell to test the initial support at 1225.35. This led to a quick rebound in price action. For the moment, gold prices are seen consolidating above this support level. A confirmed break out below this support level is needed for gold prices to extended declines to the 1207.00 region of support. To the upside, any gains are likely to be limited to the resistance level of 1238.02.

GBPUSD (1.2806): The British pound continued to consolidate near the support level of 1.2808 level although briefly dipping below this level. The 4-hour Stochastics oscillator is seen posting a higher low indicating a potential bullish divergence. Price action will need to clear the immediate short-term resistance level of 1.2850 to confirm the upside. The previously breached support level at 1.3086 is the likely upside target in price

Daily Pivots: (S1) 143.26; (P) 143.83; (R1) 144.33; More...

Intraday bias in GBP/JPY remains neutral for consolidation above 142.76 temporary low. Near term outlook remains cautiously bearish as long as 146.50 minor resistance holds. Break of 142.76 will extend the fall from 149.70 for retesting 139.88 low.

In the bigger picture, as long as 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) holds, up trend from 122.36 (2016 low) would still extend beyond 156.69 high. However, decisive break of 139.29/47 will suggest that such up trend is completed and turn outlook bearish. In that case, next target is 61.8% retracement at 135.43.

EURUSD (1.1381): The EURUSD currency pair continues to trend lower, but recent price action is signaling potential exhaustion to the downside in price. The next lower support is seen coming in at 1.1310 - 1.1300 region. A decline could see this support level being tested. To the upside, the 1.1435 level is likely to act as resistance and could keep a lid on the gains.

The U.S. Dollar managed to hold its ground on Monday. Economic data was sparse. In the European trading session, the euro currency came under pressure after the German chancellor, Angela Merkel announced that she was stepping down as the head of the German Christian Democratic Party (CDU). Her announcement came after regional elections showed that the two leading parties, the CSU and the CDU fared poorly.

The NY trading session saw the U.S. personal income and spending data. As widely expected, personal spending rose 0.4%. However, personal income rose at a slower pace of just 0.2%. Meanwhile, data for the previous month was revised higher to 0.4%.

The U.S. core PCE price index data jumped 0.2% in September beating estimates of a 0.1% increase. On a year over year basis, the core PCE price index was unchanged at 2.0%.

The final trading day of the month of October will see the economic data kicking off with the flash GDP from France. Economists forecast a 0.4% rebound in the GDP for the third quarter.

German preliminary CPI data is expected to show inflating rising at a slower pace of 0.1% compared to 0.4% increase the month before.

The NY trading session is relatively quiet. The conference board's consumer confidence data is due which is expected to show a modest dip to 136.3 compared to 138.4 previously.

Daily Pivots: (S1) 127.29; (P) 127.76; (R1) 128.29; More....

Intraday bias in EUR/JPY stays neutral at this point. Near term outlook also remain bearish with 128.44 minor resistance intact. ON the downside, break of 126.63 will extend the fall from 133.12 and target 124.89 low. Nonetheless, break of 1.2844 will indicate short term bottoming and turn bias back to the upside for 130.20 resistance and above.

In the bigger picture, as long as 124.08 key resistance turn supported holds, larger up trend from 109.03 (2016 low) is still in progress. Firm break of 137.49 structural resistance will target 141.04/149.76 resistance zone next. However, decisive break of 124.08 will argue that such rise from 109.03 has completed and turn outlook bearish. In that case, deeper fall would be seen to 61.8% retracement of 109.03 to 137.49 at 119.90.

Daily Pivots: (S1) 0.8869; (P) 0.8889; (R1) 0.8909; More...

EUR/GBP's rebound form 0.8722 is still in progress. Intraday bias stays on the upside for On the downside, break of 0.8825 minor support will suggest that the choppy corrective rebound is completed. And, intraday bias will be turned back to the downside for 0.8722 and possibly below.

In the bigger picture, EUR/GBP is seen as staying in long term range pattern started at 0.9304 (2016 high). On the downside, break of 0.8722 will extend the falling leg through 0.8620 support. On the upside, break of 0.9097 will target 0.9304 resistance instead.

Daily Pivots: (S1) 1.6045; (P) 1.6098; (R1) 1.6169; More....

EUR/AUD gyrates lower but stays in range of 1.5984/6357. Intraday bias remains neutral for the moment. As long as 1.5984 support holds, further rise is still expected. On the upside, break of 1.6357 will resume larger up trend and target 1.6587 key resistance next. On the downside, however, break of 1.5984 will be an early sign of trend reversal and turn outlook bearish.

In the bigger picture, up trend from 1.3624 (2017 low) is still in progress. Further rise should be seen to retest 1.6587 (2015 high). Decisive break there will resume the long term rally and target 1.7488 fibonacci level. On the downside, break of 1.5984 support is need to be the first sign of medium term reversal. Otherwise, outlook will remain bullish in case of deep pull back. However, sustained break of 1.5984 will be an early sign of trend reversal and turn focus to 1.5601 support for confirmation.

Daily Pivots: (S1) 1.1365; (P) 1.1387; (R1) 1.1418; More...

Intraday bias in EUR/CHF is neutral for consolidation above 1.1343. Another fall is expected as long as 1.1429 minor resistance holds. Corrective corrective rise from 1.1173 could have completed at 1.1501 already. Below 1.1343 will target 1.1154/98 key support zone again. At this point, we'd still expect this key support zone to hold. On the upside, above 1.1429 minor resistance will turn focus back to 1.1501 first. But still, break there is needed to confirm rally resumption. Otherwise, risk will stay on the downside even in case of strong recovery.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by support zone of 1.1198 (2016 high) and 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to complete it and bring rebound. This cluster level is in proximity to long term channel support (now at 1.1243) too. A break of 1.2 key resistance is still expected in the medium term long term. However, sustained break of the mentioned support zone will mark reversal of the long term trend. In that case, 1.0629 key support will be back into focus.

American indices were again under pressure at the end of the day, rewriting minimums from May to index S&P500 According to the results of the day losses amounted to 0.7%, although the amplitude of fluctuations remains elevated, reaching 3.8% in just a few hours.

Spreading fixation of profit has put the quartet FANG (Facebook, Amazon, Netflix, Alphabet) under the main blow, took away from their total capitalization of about $600 billion from peak values. The main driver of the weakening on Friday and Monday were the shares Amazon, that lost over 14% after a weak earnings report.

At the same time, key indices are supported during recessions, and outside of the current weakening the trend shifts in the stock markets. Growth shares, an excellent example of which is FANG, risk giving up leadership to income stocks with good earnings and dividends.

Income-oriented equities are the focus of the market as the economic cycle ages. The next phase may be the demand for countercyclical papers, which are presented by the companies of the military-industrial complex, manufacturers of medicines and foodstuffs. But it is not so easy to predict exact time of this switch.

It should be noted that the purchase of indices on recessions in combination with strong macroeconomic data from the USA does not allow to speak about large-scale sale, but only about the change of priorities among investors.

The dynamics of Asian playgrounds in the morning on Tuesday implicitly confirms our idea. Index Nikkei Adds 2.2% in the morning. Futures on S&P500 Grow by 0.6% in the morning, and the Japanese yen (a great barometer of demand for risks) loses 0.8%, pointing to the persistence of global investors thrust to the purchases of securities.

The dollar index is slowly gaining strength, settling in 96.50 – one step from the highs from the middle of 2017. The main reason for the weakening was the fears around the political situation in Germany, where Merkel promised to resign from the post of head of the CDU party and leave the post of Chancellor after the 2021.