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During previous trading session the buck appreciated against the gold by 0.88%. The downfall was mainly driven by optimistic expectations of the upcoming talks between the House and Senate. An interesting detail is that yesterday’s mid-day plunge was almost identical to drop that happened seven days ago. This, in turn, means that movement of the pair is now guided by a medium-term descending channel, which came in place of the long-term dominant ascending channel. This transformation is also supported by traders’ sentiment, which becomes less and less bullish. As for today, the upper target is supposedly located at the 1,274.00 mark. However, it is unlikely that bulls will manage to gain a foothold there due resistance zone located near 1,271.00 as well as the falling 55- and 100-hour SMAs.

Beginning of joint drills between South Korean and American armies near North Korean border led to another rise in demand for safe haven assets. Accordingly, the pair has reached combined support created by the weekly PP, the 200-hour SMA and the lower trend-line of a new junior descending channel. This fact point out on the upcoming recovery of the pair. As soon as markets will calm down, the rate is likely to start climbing back towards the 112.50 mark that is surrounded by the 50% Fibonacci retracement level and two other moving averages. However, if the situation on the Korean peninsula will continue to aggravate, the pair might take the opposite direction and try breaking the above support.

Despite release of worse than expected Services PMI data, the cable could not pass below the monthly PP located at 1.3372 and was forced to halt the fall. At the moment, it is moving horizontally, being squeezed between the 55- and 100-hour SMAs from the top and the weekly PP with the 200-hour SMA from the bottom. Even though support barriers look stronger, generally, the rate is expected to continue moving downwards.

However, there is a need to take into account that this pair is highly affected by political news coming from both sides of Atlantic that lead to impulse spikes, which can not only break minor patterns but even alter the forming downtrend.

In line with expectations, a combination of the 55-, 100- and 200-hour SMAs pushed the rate downwards, leading to dissolution of the one-month long ascending channel. The plunge happened despite release of worse than expected non-manufacturing data, which means that markets are mainly focused on talks between the House and Senate about tax reform. Most probably these expectations will continue to nourish the buck through the whole week. On hourly chart this scenario nicely matches with a minor descending channel whose existence was additionally confirmed by a rebound from the monthly PP at 1.1806. Accordingly, today the pair is trying to return back to the 1.1866 level. The most likely scenario is that this attempt will be neutralized by one of the above MAs.

EURUSD

The EURUSD had a bearish momentum yesterday broke below the bullish channel as you can see on my H1 chart below. This fact is a serious threat to the bullish phase, but note that we still need a clear break below 1.1800 to confirm that the bullish phase is no longer valid, testing 1.1690 region. The bias is bearish in nearest term. Immediate resistance is seen around 1.1850 – 1.1870 area. A clear break back above that area could lead price to neutral zone in nearest term but would keep the bullish phase intact testing 1.1925 – 1.1960 region. Overall I remain neutral.

GBPUSD

The GBPUSD attempted to push lower yesterday bottomed at 1.3370 but closed higher at 1.3441. The bias is neutral in nearest term. Immediate support is seen around 1.3370. A clear break below that area could trigger further bearish pressure testing 1.3330 but overall I remain bullish and any downside pullback should be seen as a good opportunity to buy. Immediate resistance is seen around 1.3480. A clear break above that area could trigger further bullish pressure testing 1.3550 region.

USDJPY

The USDJPY was indecisive yesterday. The bias is neutral in nearest term. Overall I remain neutral but still prefer a bearish scenario at this phase as a part of the bearish pin bar scenario printed on daily chart on November 06. Immediate resistance is seen around 113.00/20 area which remains a good place to sell with a tight stop loss as a clear break above that area could trigger further bullish pressure retesting 114.50 region. Immediate support is seen around 112.25. A clear break below that area could trigger further bearish pressure testing 111.65 region.

USDCHF

The USDCHF continued its bullish momentum yesterday but still struggling around 0.9875 resistance area, which remains a good place to sell with a tight stop loss as a clear break above that area could trigger further bullish pressure testing 0.9940 region. The bias remains bullish in nearest term. Immediate support is seen around 0.9850. A clear break below that area could lead price to neutral zone in nearest term testing 0.9818 – 0.9780 region. Overall I remain neutral.

WTI oil price edged lower on Wednesday after Tuesday's action was directionless and ended in Doji candle, despite bigger than expected draw in crude oil stocks (5.48 million barrels vs 4.1 million barrels f/c) API report showed. Fresh easing today comes on speculation that EIA crude inventories report, due later today, will show build in gasoline and gasoline supplies. Near-term price action is holding between 20/10 SMA's ($57.13/$57.81 respectively) which mark initial support/resistance points. Fresh bears are pressuring 20SMA support and sustained break lower to generate bearish signal for test of next significant supports at $56.75 (29 Nov higher low) and $56.41 (Fibo 61.8% of $54.80/$59.02). Conversely, sustained lift above 10SMA would improve the sentiment.

Res: 57.55, 57.82, 58.31, 58.86
Sup: 57.13, 56.75, 56.41, 55.80

The still heavy long positioning in the U.S. precious metals futures are about to have their metals tested if the charts are anything to go by.

Gold

Long-suffering bullish gold traders had more reason to worry overnight, as they looked up into the sky and saw the vultures circling over their positioning. Despite a flattening of the U.S. yield curve, gold could not make any gains; instead, it fell 15 dollars to a low of 1261.00 before rising slightly to 1266.00 to gasp for air.

To say that the technical picture for gold this morning is ominous would be an understatement. Gold fell through trendline support at 1272.00, and then the 200-day moving average at 1267.25, both of which form resistance today. Gold stopped just shy of the long-term support at 1260.00 before its unconvincing recovery. A break of this level may be the straw that breaks the camel's back for structural long positioning and in turn could trigger a rush for the exit door.

Traders will be eyeing potential dollar strength nervously as we head into Friday's payrolls data followed by next week's FOMC. If this pushes gold over the 1260.00 cliffs, the technical picture suggests gold may not find many friends until the 1200.00 regions.

Silver

If the vultures are circling gold, then with silver, they are already feasting on the carcass. Silver broke its long-term support line at 17.0000 last week and has continued its downward spiral unabated ever since. In the process leaving it's 100 and 200-day moving averages above as a distant memory.

Silver has managed the barest of dead cat bounces today in Asia, trading slightly of the overnight lows at 16.1450. Resistance resides at 16.2360 initially followed by 16.5380.

The technical picture looks grim below. Silver will have support at 16.0000 initially, thereafter there is nothing but clear air until the 14.9200 area to arrest its decline.

The only glimmer of hope on silver's technical picture is that its Relative Strength Index (RSI) is pushing into very oversold territory. Unless the tone of the markets changes though, this may mean only temporary salvation but does imply that the 16.0000 support should be tough to break in the short-term.

GBP/USD – 1.3373

 
Although cable found renewed buying interest at 1.3221 and rallied to 1.3550, the subsequent retreat suggests consolidation below this level would be seen and as long as said resistance hold, mild downside bias is for at least a retracement of recent rise, hence weakness to 1.3300-10 would be seen, however, break of said support at 1.3221 is needed to signal top has been formed at 1.3550, bring further fall towards 1.3250-60 later.

Our preferred count on the daily chart is that cable's rebound from 1.3500 (wave (A) trough) is unfolding as a wave (B) with A ended at 1.7043, followed by triangle wave B and wave C as well as wave (B) has possibly ended at 1.7192, below support at 1.4232 would add credence to this count, then further fall to 1.4000 level would follow but reckon downside would be limited to 1.3655 support and price should stay above previous support at 1.3500.

On the upside, whilst initial recovery to 1.3400-10 cannot be rude out, reckon 1.3470-80 would limit upside and bring another retreat later. Above said resistance at 1.3550 would abort and signal the rise from 1.3027 is still in progress for gain to 1.3595-00 but break there is needed to confirm early upmove has resumed for retest of 1.3658 resistance first.

 
Recommendation: Sell at 1.3470 for 1.3270 with stop below 1.3570. 

 Longer term - Cable's rise from 1.0520 (Feb 1985) to 2.0100 (September 1992) is seen as [A], the decline to 1.3682 is labeled as (B) and (C) wave rally has ended at 2.1162 (9 Nov, 2007) which is also the top of larger degree wave B with circle. The selloff from there is a 5-waver with wave (A) ended at 1.3500 (23 Jan 2009), wave (B) itself is labeled as A: 1.6733, triangle wave B: 1.4813 and wave C as well as top of wave (B) ended at 1.7192 (2014), hence the selloff from there is an impulsive wave (C) with wave I : 1.4566, wave II 1.5930, an extended wave III is unfolding and already exceeded our downside target at 1.3500 and 1.3000, hence weakness to 1.2500 and possibly 1.2000 cannot be ruled out, however, price should stay well above psychological level at 1.0000.

The British pound remains under downside pressure against the U.S dollar, as UK political uncertainty hurts the GBPUSD pair. After falling to 1.3367 on Tuesday, sterling recovered quickly but was swiftly rejected by technical selling around the 1.3450 resistance level, during the U.S session. Price-action on the GBPUSD pair currently trades around the 1.3420 level, ahead of an EU press conference later today. The press conference will be discussing the progress made on the UK and EU on Brexit negotiations, with the Irish border issue remaining a contentious issue.

Should the GBPUSD pair move below the 1.3400 level, further downside towards the 1.3360 and 1.3303 levels appears likely.

If GBPUSD buyers can hold price-action above the 1.3450 technical level again, further upside towards the 1.3510 and 1.3549 levels seems most likely.

The U.S dollar has moved sharply lower against the Japanese yen during the Asian trading session, hitting 112.10, as Japanese stocks slide. The USDJPY pair has been hit by risk-risk-off sentiment, with the Nikkei225 down over 2 percent on the day, continuing the decline seen in U.S stocks and bond yields on Tuesday. Price-action currently trades below the key 112.20 level, ahead of the release of the ADP jobs report, which is expected to show that the U.S economy created 185,000 private sector jobs in November.

The USDJPY pair remains strongly bearish while trading below the 112.20 technical level, intraday sellers may look to test the 111.90 and 111.58 technical levels.

If push price-action on the USDJPY pair moves above the 112.20 technical level, price-action may move towards the 112.40 and 112.70 resistance levels.