Global macro overview for 12/12/2016

Global macro overview for 12/12/2016:

The most important fundamental event of the day seems to be the FOMC interest rate decision and the economic assessment. Market participants are poricing in the probability of the rate hike on Wednesday at 100%. 92% of that is in favor of a move for the Fed Funds rate range to 0.50-0.75% from 0.25-0.50%. The remaining balance of 8% is looking to 0.75/1.00%. The chances for the Fed not to hike interest rates are very small and there are plenty of reasons for that. The most important one seems to be a lack of excuses for not hiking now and it's probably not a coincidence that they are raising rates at the same time as last year. If they wouldn't increase the rates, they would lose all the credibility. As Fed Chairperson Jannet Yellen said earlier this year there would be at least two interest rate hikes in 2016. In conclusion, it is not about the interest rate hike which is rather certain, but about the message that will come with the hike, and particularly, whether the US central bank plans to continue tightening in 2017 and how many times. Hopefully we will find out on Wednesday at 08:00pm GMT.

Let's now take a look at the US Dollar index technical picture in the daily time frame. The bulls are still in control over this market as the index is trading just around the recent highs at the level of 102.06. The trend remains bullish as long as the level of 99.12 is not clearly violated.

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Global macro overview for 12/12/2016

Global macro overview for 12/12/2016:

Crude oil prices grew strongly overnight, by 5.8%. Oil extended its rally when non-OPEC members decided to cut oil supply in order to join major oil producers from the cartel. Non-OPEC producers agreed to cut oil output by -558K bpd for six months starting on January 1st 2017. Moreover, this deal might get extended for another six-month period. The rhetoric expressed by Saudi Arabia Energy Minister Khalid Al-Falih is also bullish for the oil market, who indicated that his country could go beyond their commitment at last month's OPEC meeting (-10.058M bpd), they are willing to lower their output below the psychologically significant -10M bpd level depending on market conditions. In conclusion, a very good morning for crude oil bulls as finally the agreement between OPEC and non-OPEC countries has been made.

Let's now take a look at the Crude Oil technical picture at the 4H time frame. After the spike up to the level of 54.47 the market is in full control of the bullish camp. Moreover, the sequence of higher high and higher lows might suggest the market will be trending higher towards the level of $60.00.

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Technical analysis of USD/CAD for December 12, 2016

General overview for 12/12/2016:

The market has hit the 78%Fibo at the level of 1.3129 and now is trying to test the intraday resistance at the level of 1.3169. The whole downmove is the last part of the big abc correction, so now the market should try to rally higher. To do this, the bulls must break out above the dashed blue channel resistance around the level of 1.3263. A failure there might indicate a further deterioration lower.

Support/Resistance:

1.3061 - WS1

1.3111 - Intraday Support

1.3169 - Intraday Resistance

1.3208 - Weekly Pivot

1.3263 - WR1

1.3412 - WR2

Trading recommendations:

Day traders should consider opening only buy orders with tight SL. Any violation of the level of 1.3169 would indicate a further rally towards 1.3208 first and 1.3263 then.

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Technical analysis of EUR/JPY for December 12, 2016

General overview for 12/12/2016:

The top for the wave (3) (blue) has been established at the level of 123.34 and now the market is in corrective cycle wave (4) (blue). The first wave of this correction has been completed with the low at the level of 120.89, but it looks like the correction might evolve to a more complex and time-consuming pattern like a triangle. Sideways price action between the level of 123.34 and 120.89 is currently expected until the correction is completed.

Support/Resistance:

123.34 - Intraday Resistance

121.93 - Intraday Support

121.38 - Weekly Pivot

120.89 - Intraday Support

119.40 - WS1

118,71 - Technical Support

Trading recommendations:

Day traders should consider opening only sell orders with SL just above the level of 123.34. TP Should be set at the bottom of the range.

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EUR/NZD analysis for December 12, 2016

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Recently, EUR/NZD has been moving sideways around the price of 1.4785. According to the 30M time frame and using the market profile, I found today's point of control at the price of 1.4783. I also found a trading range between the price of 1.4815 (resistance) and the price of 1.4715 (support). My advice is to watch for a potential breakout of a trading range to confirm further direction. If the price breaks upward, a target is set at the price of 1.4935 (point of control in the background). Anyway, if the price breaks support, EUR/NZD will visit the level of 1.4650. The short-term trend is bearish.

Fibonacci Pivot Points:

Resistance levels

R1: 1.4815

R2: 1.4840

R3: 1.4875

Support levels:

S1: 1.4735

S2: 1.4710

S3: 1.4675

Trading recommendations for today: Watch for a potential breakout of a trading range to confrim futher direction.

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Gold analysis for December 12, 2016

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Recently, gold has been moving downwards. As I expected, the price tested the level of $1,151.13 in a high volume. My targets from Friday have been met. According to the 30M time frame, I found strong selling presure and watch for selling opportunities. The price took off Firday's low at the level of $1,155.95. I have placed Fibonacci expansion to find potential downward targets. I got Fibonacci expansion 61.8% at the price of $1,149.45 and Fibonacci expansion 100% at the price of $1,142.70.

Resistance levels:

R1: 1,160.85

R2: 1,161.60

R3: 1,162.75

Support levels:

S1: 1,158.60

S2: 1,157.90

S3: 1,156.70

Trading recommendations for today: Watch for potential selling opportunities.

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Technical analysis of GBP/USD for December 12, 2016

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Overview:

  • The GBP/USD pair has broken resistance at 1.2544, which acts as a support today. The pair is moving between the levels of 1.2544 and 1.2836. As the trend is still above the 100 EMA, a bullish outlook remains the same as long as the 100 EMA is headed to the upside. Consequently, the level of 1.2836 remains a key resistance zone. Therefore, there is a possibility that the GBP/USD pair will move upwards above 1.2544, which coincides with a ratio 50% of Fibonacci retracement. The falling structure does not look corrective. In order to indicate a bullish opportunity above 1.2544. So, buy above this level with the first target at 1.2836 . Moreover, if the pair succeeds to pass through 1.2836, it will move upwards continuing the bullish trend development to 1.2936 in order to test the weekly resistance 2.
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  • However, if a breakout happens at 1.2432, this scenario may be invalidated. Also, you have to note that the pair is likely to trade in a higher range as long as it remains above the level of 1.2544. Hence, the major support has already been set at the level of 1.2432.
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Technical analysis of EUR/USD for December 12, 2016

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Overview:

  • The EUR/USD pair has faced strong support at the level of 1.0517 on the H4 chart. So, the strong support has already formed at the level of 1.0517 and the pair is likely to try to approach and test it again. However, if the pair fails to pass through the level of 1.0517, the market will indicate a bullish opportunity above the new strong support level of 1.0517 (level of 1.0517 coincides with the double bottom). Thus, the market is indicating a bullish opportunity above 1.0517 so it will be good to buy at 1.0517 with the first target of 1.0672. It will also call for an uptrend in order to continue towards 1.0720. The strong daily resistance is seen at 1.0768. However, the stop loss should always be taken into account, for that it will be reasonable to set your stop loss at the level of 1.0475 because the RSI starts signaling a downward trend, as the trend is still showing strength below the moving average. On the whole, the trend is still bullish as long as the level of 1.0517 is not breached.
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Technical analysis of USDX for December 12, 2016

The Dollar index has broken above the short-term Ichimoku cloud resistance and is trading near its recent highs. Trend remains bullish as long as price is above 99.44 in the short-term and as long as price is above 96 in the long-term.

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Red line - resistance

Blue line -support

Short-term oscillators are overbought and diverging. Resistance is at 101.70-101.80. Support is at 101 for the short-term. Trend will change on a break of last week's low at 99.44. Until then trend remains bullish targeting 102-103.

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Green line -support

Weekly resistance is being tested. Trend remains bullish as long as we trade above last week's low. Breaking below last week's low will push price towards the long-term green trend line support. Target of new highs near 103-104 is still possible as long as we trade above 99.44. The 61.8% long-term Fibonacci retracement from 2001 is very important long-term resistance.

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Technical analysis of gold for December 12, 2016

Gold continues to trade in a bearish trend. Price has broken below short-term support and recent low at $1,160 and is heading towards channel support of $1,139 while the next long-term Fibonacci support is at $1,120.

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Black lines - bearish channel

Gold price got rejected at the 4 hour Ichimoku cloud. Price has entered back inside the bearish channel. Trend remains bearish. The rejection at $1,180 is a bearish sign implying that more downside should be expected. Resistance is at $1,180. Breaking above it will confirm trend reversal.

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Red lines - bullish wedge

There is a downward sloping wedge being formed in the weekly chart. Price has broken below the 61.8% Fibonacci retracement and is heading towards the 78.6% Fibonacci retracement. Breaking below the Ichimoku cloud is not a good sign. Oversold oscillators are diverging and this is a warning for Gold bears.

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Elliott wave analysis of EUR/NZD for December 12, 2016

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Daily

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8-Hourly

Wave summary:

After an unexpected break below 1.4737, we need to allow for more downside closer to 1.4590 before the ending diagonal from 1.5837 finally completes and a new impulsive rally can materialize.

Only a direct break above resistance at 1.5092 will confirm that the end ending diagonal has completed and a new impulsive rally is developing towards 1.5837 as the first upside target, but longer term, much more upside is expected.

Trading recommendation:

We have placed a buy-order at 1.4610 or upon a break above 1.5092. With stop placed at 1.4585.

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Elliott wave analysis of EUR/JPY for December 12, 2016

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Daily

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8-Hourly

Wave summary:

After the strong decline from 123.35, we have seen the expected minor correction, which is expected to find resistance in the 122.11 - 122.44 area for the next decline towards the 118.00 - 118.38 area to complete the correction in wave (iv) for the last rally higher towards 126.54 to complete wave (v) and 3. At 126.54 wave 3 will be 161.8% the length of wave 1, which is the minimum extension target, so we have to be aware of the possibility of an extension beyond 126.54 that will target 129.95 where wave 3 will be 200% the length of wave 1.

For the moment, look for a top in the 122.11 - 122.44 area for a break below minor support at 121.60 confirming the next part of the decline towards 118.00 - 118.38 area.

Trading recommendation:

We sold EUR at 122.10 with stop placed at 123.40. If you are not short EUR yet, then sell near 122.44 or upon a break below 121.60 and use the same stop at 123.40. Place take profit at 118.50.

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Technical analysis of USD/JPY for December 12, 2016

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USD/JPY is expected to trade in a higher range. The pair is still trading in a bullish channel, which emerged on December 8. Besides, the ascending 20-period and 50-period moving averages play strong support roles, and should push the prices higher.

The University of Michigan sentiment index (preliminary reading) improved to 98.0 in December (vs. 94.5 expected), the highest level since January 2015, from 93.8 in November. U.S. government bonds pulled backed sharply as investors closely watched a slate of bond auctions this week -- both sales of three-year notes and 10-year notes scheduled for Monday, a 30-year bond auction Tuesday. The benchmark 10-year Treasury yield rose to 2.462% from 2.391% Thursday. The U.S. dollar posted gains for the second day with the ICE U.S. Dollar Index adding 0.5% to 101.59. CME Group data showed that investors assigned a 97% probability of the Federal Reserve raising interest rates at its December 14 meeting.

Hence, as long as 114.85 is support, a new challenge of the next horizontal resistance at 116.05 seems more likely to occur, if breakout, look for a further advance towards 116.50 as possible.

Trading Recommendation: The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 116.05 and the second one at 116.50. In the alternative scenario, short positions are recommended with the first target at 114.30 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 113.90. The pivot point lies at 114.85.

Resistance levels: 116.05, 116.50, 117.00

Support levels: 114.30, 113.90, 113.65

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Technical analysis of USD/CHF for December 12, 2016

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USD/CHF is expected to trade with a bullish bias. The pair remains bullish above its horizontal support at 1.0150, and is likely to post a new rebound. The relative strength index is turning up, and also broke above its neutrality area at 50. Regarding economic data, the University of Michigan sentiment index (preliminary reading) improved to 98.0 in December (vs. 94.5 expected), the highest level since January 2015, from 93.8 in November.

Hence, as long as the key support at 1.0150 remains intact, look for a further advance towards 1.0215. A break above this level would open the path to 1.0240.

Resistance levels: 1.0215, 1.0240, 1.0285

Support levels: 1.0110, 1.0080, 1.0060

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Technical analysis of NZD/USD for December 12, 2016

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NZD/USD is expeted to trade mainly with a downside movement. The pair accelerated on the downside after it broke below its 20-period and 50-period moving averages. The relative strength index is below its neutrality level at 50 and lacks upward momentum. Therefore, as long as 0.7160 holds on the upside, look for a further drop toward 0.7100. A break below this level would call for a new decline toward 0.7070.

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.7100. A break below this target will move the pair further downwards to 0.7070. The pivot point stands at 0.7160. In case the price moves in the opposite direction and bounces back from the support level, it will go above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 0.7190 and the second one at 0.7210.

Resistance levels: 0.7190, 0.7210, 0.7225

Support levels: 0.7100, 0.7070, 0.7015

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Technical analysis of GBP/JPY for December 12, 2016

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GBP/JPY is expected to trade mainly with an upside movement. The pair has crossed above its 20-period moving average, which stays above the 50-period one. And the relative strength index is well directed and lacks downward momentum. The British pound dropped for the fourth straight session against the U.S. dollar as investors' hopes for a delayed Brexit were dampened after British lawmakers said they would stick to Prime Minister Theresa May's timetable.

As long as 144.35 is not broken down, further bounce is preferred with 145.90 and 146.65 as targets.

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. Therefore, long positions are recommended with the first target at 145.90 and the second one at 146.65. In the alternative scenario, short positions are recommended with the first target at 143.70 if the price moves below its pivot point. A break of this target is likely to push the pair further downwards, and one may expect the second target at 143.30. The pivot point lies at 114.35.

Resistance levels: 145.90, 146.65, 147.35

Support levels: 143.70, 143.30, 142.70

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Daily analysis of major pairs for December 12, 2016

EUR/USD: There is a clean "sell" signal on this pair. Price generally moved downwards last week, closing below the resistance line at 1.0600, and nearly reaching the support line at 1.0550. This week, price could reach the support lines at 1.0550, 1.0500, and 1.0450, for the outlook on the market is bearish. In fact, there is a possibility that the EUR may reach parity with the USD in a foreseeable future.

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USD/CHF: There is a bullish signal on the USD/CHF pair. In spite of tight volatility and bears' machinations last week, bulls were able to push the market up a bit. Price is now above the support level at 1.0150, targeting the resistance levels at 1.0200 and 1.0250. CHF is bound to gather some stamina this week. It may not affect USD/CHF, unless the stamina is too much.

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GBP/USD: The Cable pulled back most of the last week, closing at 1.2576 on Friday. This has become a threat to the recent bullish bias on the market; plus a movement below the accumulation territory at 1.2500 would result in the end of the bullish bias. For the bullish bias not to be overruled, price needs to stay above that accumulation territory.

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USD/JPY: The USD/JPY pair consolidated last week, and then began to trend upwards on Friday. There is a Bullish Confirmation Pattern on the 4-hour chart. Since the outlook on JPY pairs remains bullish for this week, the USD/JPY pair would also normally trend further upwards. The targets for this week are located at the supply levels of 115.50, 116.00, and 116.50.

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EUR/JPY: The market was quite choppy last week, but the bullish outlook on it remains intact. This week, further upwards movement is expected as price would likely reach the supply zones at 122.00, 122.50, and 123.00. As long as the demand zones at 120.00 and 119.50 are not breached to the downside, the bullish outlook would remain rational.

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NZD/USD Intraday technical levels and trading recommendations for December 12, 2016

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During August and September, a consolidation range was established from the price level of 0.7250 up to 0.7350.

Later on October 20, the lower limit of the consolidation range (0.7250) stood as a temporary resistance which initiated a bearish movement towards 0.7100 (lower limit of the depicted channel).

Bullish recovery was expressed around the price level of 0.7100 on October 28. Hence, a double-bottom pattern was expressed on the chart.

Bullish fixation above 0.7250 and 0.7350 was needed to allow further bullish advance towards the projected target of the reversal pattern around 0.7450.

However, significant signs of a bearish reversal were expressed around the upper limit of the price range (0.7350).

The bearish breakdown of 0.7250 (lower limit of the depicted range) enhanced the bearish side of the market towards the price level of 0.7100 (recent bottom of October 28) which was broken as well.

Bearish persistence below 0.7100 allowed a quick bearish decline towards 0.6960 (BUY zone) where bullish rejection and a valid BUY entry were expected. All T/P levels were successfully achieved.

Bullish pullback was pursued towards the price level of 0.7230 (the backside of the broken uptrend line) where a valid SELL entry was offered. It's already running in profits now. S/L should be lowered to 0.7190.

Bearish persistence below the price level of 0.7100 is needed to pursue towards lower target levels around 0.7060 and 0.6990.

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USD/CAD intraday technical levels and trading recommendations for December 12, 2016

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On May 16, a bullish pullback towards 1.3000 (61.8% Fibonacci level) was expected to offer a valid signal to sell the USD/CAD pair. However, a lack of a significant bearish rejection was manifested during recent consolidations.

On May 18, temporary bullish fixation above 1.3000 (61.8% Fibonacci level) opened the way towards the 1.3180 level where significant bearish pressure was originated.

Bearish persistence below 1.3000-1.2970 (61.8% Fibonacci level) was needed to enhance bearish momentum in the market.

However, on August 18 signs of bullish recovery were manifested around the price level of 1.2830 which led to the current bullish breakout above 1.3000.

The USD/CAD pair was trapped between the price levels of 1.3000 (61.8% Fibonacci level) and 1.3360 (50% Fibonacci level) until a bullish breakout took place one month ago.

Note that the USD/CAD pair was challenging the upper limit of the depicted flag pattern around 1.3360-1.3400 which failed to apply enough bearish pressure on the pair during the first attempt.

Shortly after, significant bearish engulfing weekly candlestick was expressed by the end of the week indicating strong resistance around 1.3550.

Bearish persistence below the price level of 1.3300 (50% Fibonacci Level) was achieved. This allows further bearish decline towards 1.3200, 1.3090 and 1.2990 (61.8% Fibonacci Level) where bullish rejection should be expected.

On the other hand, bullish breakout above 1.3360 will probably liberate a quick bullish movement towards 1.3650 (low probability).

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Intraday technical levels and trading recommendations for GBP/USD for December 12, 2016

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The price zone between 1.3845 and 1.3550 (historical bottoms set in January 2009) was considered a significant demand zone to be watched for bullish recovery.

However, by the end of June a significant bearish break below 1.3550 was expressed as seen on the depicted charts (fundamental reasons).

Bearish persistence below the demand level at 1.3550 enhanced the bearish scenario towards the current price levels around 1.2700 (nearest bearish projection target).

Note that the GBP/USD pair was trapped inside the depicted consolidation range above 1.2700 until a bearish breakout took place on October 6.

Daily persistence below 1.2700 confirmed the bearish Flag pattern. That is why, a bearish projection target would be located around 1.2020.

Recently, bullish recovery was manifested around 1.2080. That is why, a bullish pullback is being executed towards 1.2700-1.2750.

Risky traders can consider the current bullish pullback towards the price zone of 1.2700-1.2750 for a valid SELL entry. S/L should be set as daily closure above 1.2750. T/P levels should be located at 1.2300 and 1.2100.

This SELL entry should be managed cautiously as the ascending bottoms around the price levels of 1.2120 and 1.2320 will probably apply significant bullish pressure over the Supply zone of 1.2700-1.2750.

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Intraday technical levels and trading recommendations for EUR/USD for December 12, 2016

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In January 2015, the EUR/USD pair moved below the major demand levels near 1.2100 where historical bottoms were previously set in July 2012 and June 2010. Hence, a long-term bearish target was projected towards 0.9450.

In March 2015, the EUR/USD bears challenged the monthly demand level around 1.0570, which had been previously reached in August 1997.

Later in April 2015, a strong bullish recovery was observed around the mentioned demand level. However, next monthly candlesticks (September, October, and November) reflected a strong bearish rejection around the area of 1.1400-1.1500.

Again in February 2016, the depicted price levels around 1.1400-1.1500 acted as a significant supply zone during the bullish pullback.

That is why, recent bearish rejection was expected around the depicted supply levels (note the monthly candlesticks of May, August, and October 2016).

In the longer term, the level of 0.9450 will remain a projected bearish target when the current monthly candlestick comes to close below the depicted monthly demand level of 1.0570.

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The long-term outlook for the EUR/USD pair remains bearish as the monthly chart illustrates. Bearish persistence below 1.0825 is needed to enhance this bearish scenario.

In September 2016, temporary bullish breakout above 1.1250 was expressed again, but evident bearish pressure was applied on the EUR/USD pair on September 16.

Bearish closure below 1.1250 (supply level 1) maintained enough bearish pressure and enhanced the bearish momentum towards the price level of 1.1000 (key level 1).

On November 9, obvious bearish breakdown of the 1.1000 price level occurred (Shooting Star daily candlestick). Moreover, further bearish decline below 1.0825 (Fibonacci Expansion 100%) was expressed.

Bearish persistence below 1.0825 allowed further bearish decline to occur to 1.0570 (demand level) where bullish rejection and a valid BUY entry were expected by the end of last week.

Recent bullish recovery was seen on the depicted daily chart.

The price level of 1.0825 (Fibonacci Expansion 100%) constituted a recent supply level which offered a valid SELL entry. Stop Loss should be lowered to 1.0650 to secure some profits

On the other hand, bearish persistence below the depicted demand level around 1.0570 is needed to allow further bearish decline. The first bearish target would be located around 1.0220.

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Daily analysis of USDX for December 12, 2016

The index managed to consolidate gains during Friday above the 200 SMA and it's expected to see a breakout above the 101.93 level, which should open the doors to test new higher levels. Before the last Federal Reserve's meeting of the year, USDX could start to trade sideways, capped by the strong resistance area of 101.93. If the index does a pullback at this stage, then it can test the 100.93 zone, which is a demand level.

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H1 chart's resistance levels: 101.56 / 101.93

H1 chart's support levels: 100.93 / 100.43

Trading recommendations for today: Based on the H1 chart, place buy (long) orders only if the USD Index breaks with a bullish candlestick; the resistance level is at 101.56, take profit is at 101.93 and stop loss is at 101.18.

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Daily analysis of GBP/USD for December 12, 2016

GBP/USD ended last week within the demand zone of 1.2551, looking for bullish momentum to resume the overall bias. However, as we noticed during December 6th session, the Cable plunged to strengthen the bearish structure. If we see a breakout below the 1.2551 level, price is expected to reach the 1.2430 level, which should invalidate the bullish bias in the short term.

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H1 chart's resistance levels: 1.2653 / 1.2763

H1 chart's support levels: 1.2551 / 1.2430

Trading recommendations for today: Based on the H1 chart, buy (long) orders only if the GBP/USD pair breaks a bullish candlestick; the resistance level is at 1.2653, take profit is at 1.2763and stop loss is at 1.2543.

The material has been provided by InstaForex Company - www.instaforex.com