Midweek Report 9th October

Gold
For most of September it was the key resistance at 1214 that looked to be attacked but the past couple of weeks has seen the first main support at 1182 tested. This occurred again yesterday touching a low of 1183 before recovering for the close. As long as this remains the case, then Gold is continuing in a sideways pattern that on the weekly chart, shows signs of base building. A close below 1180 or above 1220 could be the technical trigger for the next move. Therefore currently, many traders may continue to play the range.

Currencies
EUR seems to be under attack currently, losing ground against USD and more so against GBP. This has been triggered by concerns over Italy's debt management. At the end of August there was a bearish candle in EURGBP and the beginning of September saw it break a trend support line. This kept the pressure on and although there has been a couple of bounces, it continued downwards in an Elliot Wave formation. This is a five-wave move as shown by the arrows on the chart. Typically, a three-wave correction could be expected but there needs to be certainty that the fifth down-leg has completed. Yesterday's candle was close to being a Doji, almost opening and closing at the same price. This is not a strong reversal pattern and the long upper shadow is not ideal. If it continues on a downward trajectory, the next support is at .8718 however, if not already short it could be dangerous to begin so at that level. If there is a bounce, then first resistance is up at .8855.

VIBHS Financial Review