Midweek Report 2nd October 16th

Gold Last Thursday saw a spectacular rally in Gold which can be argued was long overdue. It has been caught in a range for some time, but closing last week above 1214 was a victory for the Bulls. Yesterday, Gold posted a high of 1233 before slipping back for the close. This failure was in the middle of a heavy work area, circled on the chart, from July month-end. Another issue of note is that yesterday's high was short of the 38.2 Fibonacci Retracement of the move down that began in April therefore, although positive after the breakout, Gold is now facing a tough resistance area. The Fib level comes in at 1238 and is given protection by the work area mentioned above. Gold should cope with a pullback but the Bulls must defend 1214 to maintain a positive outlook. Technically, there is potential for a new short to medium-term range to establish itself between these two levels, 1214 and 1238.

Currencies With Brexit the centre of attention, EURGBP remains firmly in focus. Recent months have witnessed a Bearish Elliot Wave formation which is a five-wave down move. The fifth wave was completed last week and the technicians were expecting an ABC correction. The first leg of this three-wave bounce looks to have completed and because it has traded through gap support today means the second wave, a down leg, has begun. If this pair continues to follow the Elliot wave conditions, then it should see support develop before the recent low. The first support of note comes in at .8777, followed by .8723. Prime Minister May is facing crucial talks this week so there is likely to be some action.

VIBHS Financial Review