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Commodity currencies jump as U.S Dollar consolidate

Article by ForexTime

After the recent sell-off seen in the last days, commodity currencies managed to bounce today boost by the recovery of the upside trend in Oil prices and a consolidation in the U.S Dollar.


Beginning with the Australian Dollar, the Aussie has showed a hammer candlestick at the close of yesterday, which warned about a potential bullish reversal for today. Effectively, the pair jumped and managed to overtake the 0.7600 handle, reaching the hourly resistance of 0.7645.

Looking at the daily trend, prices remain well supported as far as 0.7537 low is in place and a continuation higher in the direction of 0.7690 peak is possible if we see a daily close above 0.7645 barrier.

To summarize, the pair turned bullish in the hourly chart, joining the daily technical picture, which keeps the door open for further upside in the coming week. In the flipside, a move back towards 0.7590 should offer fresh buying opportunities for bull as this level represents the new demand zone in the near-term.


The Kiwi strengthened today as prices has rallied to the 61.8% retracement of the recent drop that began from 0.7200 peak before to retreat during the U.S trading session.

The pair remain bearish below this peak, therefore the recent recovery is likely to be short-lived and another continuation to the downside may happen in the coming days.

Traders should focus on both 0.7135 high and 0.7050 low as a break outside of this range will give more clues about the direction that can take this pair in the following week.


After several attempts to overtake 1.3300 psychological barrier, the pair fell sharply as bearish momentum increased significantly during yesterday.

In addition, the pair break below 1.3218 hourly support registered following the FOMC meeting minutes on Wednesday, reinforcing the bearish outlook in the short-term. In the meantime, prices are testing a major support located at 1.3130 and a break below it should lead to further decline in the direction of 1.3070 level.

To conclude, momentum indicators turned negative in this pair, which keep the outlook bearish for next week with potential targets around 1.3070 followed by 1.3000 weekly support.

In the opposite, only a daily close above 1.3220 level will cancel this bearish scenario.


Gold prices stabilized in the recent days after the big sell-off seen next week, meanwhile, as far as the Dollar index remain strong and speculation for U.S rate hike by the end of this year still high, the yellow metal is likely to remain under pressure.

Technically, the fight is taking place between 1262 barrier in the upside and 1246/41 zone in the downside, which keep the short-term view neutral for the time being.

From a wider angle, the daily trend still strongly bearish and as far as 1277 high is intact a continuation lower in the direction of $1235 seems ideal to end a bearish cycle from 1317 peak.

In the flipside a daily close above 1277 should warn about a potential reversal in gold prices, otherwise, downside risks should persist.


Oil remain bullish since the latest deal announced from OPEC members, however, traders should be aware that prices have reached key technical resistances which can lead to a short-term correction in the next days.

Looking at the hourly chart for crude oil prices, we can see a double top formation around 51.20 level coupled with a strong bearish trend line that comes from 51.62 peak.

This technical picture is likely to put prices under pressure as we may see some profit taking ahead of the weekly close. Meanwhile, more downside is yet to come if we see a clear breakdown below 49.10 hourly support.

The opposite scenario, is that the support holds the current sell-off, in this case prices should continue towards 52.50 resistance after a break of 51.20 firstly.


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

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About Louie Lewis

Louie Lewis
Successful forex trading starts with you first. Then comes the actual strategies and techniques. I have been involved with forex and forex trading for a few years now. It is a wonderful way to build wealth. The learning never stops and I want to help others along their journey into this wonderful market of opportunity.

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