Crude oil prices extended their latest recovery

GOLD

Gold prices fell in line with dollar's broad strength on improved market sentiment and spot traded as lows as $1,202.04 a troy ounce during the European session, consolidating the rest of the day on limited markets' volatility due to an US holiday. The commodity fell for a second day inarow, as equities gained, plus some profit taking after posting the biggest weekly gain in over seven years. The commodity may continue correcting lower this Tuesday according to technical readings, as in the daily chart, the technical indicators have turned sharply lower from extreme overbought levels and maintain their bearish slopes, although is early to talk about a reversal in price's action. Shorter term, the 4 hours chart shows that the price is below its 20 SMA for the first time this month, while the technical indicators have only partially lost their bearish strength, but remain well below their midlines.

Support levels: 1,202.05 1,191.00 1,182.60

Resistance levels: 1,214.60 1,223.90 1,233.20

WTI CRUDE

Crude oil prices extended their latest recovery, although WTI futures were unable to settle above $30.00 a barrel, meeting selling interest on shortlived spikes above it. Brent crude was unchanged at $33.36 a barrel, with investors still hoping on a deal to cut production among worldwide producers. US crude advance stalled at the 50% retracement of the latest daily decline between 33.57 and 26.03, where it consolidates ahead of the Asian opening. Technically, the daily chart shows that the 20 SMA converges with the 61.8% retracement of the same rally at 30.80, still the level to break to confirm further advances. The technical indicators in the mentioned time frame head slightly higher within bearish territory, still unable to confirm further advances. In the 4 hours chart, the technical indicators have lost upward strength near overbought levels, although the 20 SMA turned higher below the current level, reflecting the latest recovery in price rather than suggesting a new leg higher.

Support levels: 29.20 28.50 27.70

Resistance levels: 30.10 30.80 31.50

EUR/USD

Market's improved mood was the theme of the day at the beginning of the week, as a sharp advance in the Chinese Yuan, and comments from China’s central bank chief playing down the likelihood of a oneoff devaluation, sent most Asian indexes sharply higher, resulting in strong gains also in European ones. In Europe, the release of the EU trade balance showed that the region recorded a €24.3bn surplus in trade in goods with the rest of the world in December 2015, compared to a year before, with exports and imports rising by 3% each, in the same period. Mario Draghi offered a testimony before the European Parliament's Economic and Monetary Affairs Committee, but offered no surprises, reiterating that “the Governing Council will review and possibly reconsider the monetary policy stance in early March.” The EUR/USD pair fell down to 1.1127 before bouncing some, but trading was limited in the US session due to a local holiday which kept stocks and banks closed. So far, the pair remained capped by selling interest around 1.1160, the immediate short term resistance for this Tuesday, although the pair may continue recovering ground, given that in the short term, the downside seems exhausted. In the 1 hour chart, the technical indicators are bouncing from oversold readings, but the price is well below its moving averages, with the 20 SMA having crossed below the 100 and 200 SMAs, indicating upward moves may be barely corrective. In the 4 hours chart, the 20 SMA is well above the current level, while the technical indicators have lost their bearish potential near oversold readings, also supporting the case of a short term recovery. Nevertheless, the pair needs to settle firmly above the 1.1200 figure to continue recovering, while below 1.1120, a critical support, the risk will turn towards the downside.

Support levels:1.1160 1.1120 1.1080

Resistance levels: 1.1200 1.1245 1.1290

GBP/USD

The British Pound remained under pressure, despite improved market mood, weighed by fears of a Brexit, and how it will affect the UK economy. The GBP/USD advanced up to 1.4534 at the beginning of the day, but was unable to sustain gains above the 1.4500 figure, and slowly slid during the rest of the day, nearing 1.4400 by the US afternoon. This Tuesday, the UK will release several key macroeconomic indicators, related to retail and producers' inflation, which may put the Pound under additional pressure, as January numbers are largely expected to come below December ones. In the meantime, the technical picture is bearish in the short term, as in the 1 hour chart, the technical indicators present tepid bearish slopes well below their midlines, while the 20 SMA turned lower around 1.4485. In the 4 hours chart, the price has faltered around its 200 EMA, and is also below a horizontal 20 SMA, while the technical indicators turned lower around their midlines, lacking enough bearish strength to confirm a new leg south. A break below 1.4395, on the other hand, may fuel the negative sentiment towards the Pound and result and a steady decline down to the 1.4250 region.

Support levels: 1.4390 1.14350 1.4310

Resistance levels: 1.4485 1.4530 1.4565

USD/JPY

The USD/JPY pair surged up to 114.71 this Monday, with the Japanese yen under pressure on improved market mood and poor local data. The release of a disappointing GDP report for the last quarter of 2015 showed that the economy contracted by the end of the year by 1.4%, fueling hopes of further easing coming from the BOJ next March. Also, a sharp increase in the Yuan prevented Chinese shares from plummeting in the first day of trading after the long holiday, boosted Asian markets, sending the Nikkei sharply higher. Yen weakened against all of its major rivals, but the decline was proportionally poor, as the pair added barely 100 pips daily basis. Technically, the 1 hour chart shows that the price has overcome its 100 SMA, but remains below a bearish 200 SMA, currently around 115.20. In the same chart, the technical indicators have turned south within positive territory, rather reflecting the lack of volume than suggesting a bearish move. In the 4 hours chart, the Momentum indicator turned slightly lower in extreme overbought territory, while the RSI heads higher around 56, supporting some further gains on a break above the mentioned daily high.

Support levels:114.10 113.70 113.35

Resistance levels:114.75 115.20 115.60

DAX

The German DAX surged by 245 points or 2.67%, closing the day at 9,206.84, as European equities followed Asian markets in their way higher. Also supporting local shares were ECB's President, Mario Draghi comments, who said that the Central Bank "will not hesitate to act" if needed to boost the local economy, in their next March meeting. The sharp advance in European hours stalled after the close with volumes reduced to their minimum on a US holiday, and the index consolidates near its high early Asia, with the daily chart showing that the index is still far below its moving averages, and that the Momentum indicator has lost upward strength well below its 100 level, suggesting that so far, the movement is just corrective. Nevertheless, and according to the 4 hours chart, the rally can extend, as the index is now above a bullish 20 SMA, while the technical indicators are turning north within positive territory after a consolidative stage, particularly on an advance beyond 9,280, a major static resistance level.

Support levels:9,125 9,042 8,966

Resistance levels: 9,280 9,334 9,418

DOW JONES

Wall Street remained closed this Monday due to a local holiday, the Presidents' Day, with the latest registered close in the Dow Jones Industrial Average a 15,973.84. The American session was for the most quiet compared to the first half of the day, but the index managed to advance some in electronic trading, tracking gains from other major indexes. Currently hovering around 16,170, the Dow benefited from a sharp advance in worldwide stocks, and the daily chart shows that the index is ending the day above its 20 SMA for the first time in a week, although the Momentum indicator heads lower below the 100 level, and the RSI indicator heads slightly higher in neutral territory. In the 4 hours chart, the technical indicators have lost upward potential near overbought territory, but that the index remains above its 20 and 100 SMAs, supporting some further gains in the case that risk sentiment remains positive.

Support levels:16,088 16,001 15,916

Resistance levels: 16,213 16,289 16,359

FTSE 100

London shares followed worldwide stocks in their way higher, with the FTSE 100 up by 119 points to close at 5,824.28. The advance was led by bank shares, bouncing on relief and with Standard Chartered up by 4.61% and Barclays by 2.26%. Miningrelated shares were mixed as gold fell, with Randgold down by 2.03%. The index gapped higher at the opening, and held on to gains by the end of the day, yet, as many other major indexes, the rally was not enough to revert the ongoing bearish trend, as in the daily chart, the index stalled right below a bearish 20 SMA, while the technical indicators halted their recoveries well below their midlines. Nevertheless, and according to the 4 hours chart, the recovery can extend during the upcoming sessions, as in the 4 hours chart, the index is now consolidating well above a bullish 20 SMA, while the Momentum indicator has resumed its advance within positive territory. The ongoing upward tone will likely be challenged should the rally extend towards the critical 6,000 level, with the longer term outlook becoming more constructive should it extend beyond it.

Support levels: 5,807 5,765 5,710

Resistance levels: 5,856 5,894 5,945