Monday, 26 Oct 2009

EUR/USD goes into a Free Fall while Crude follows Suit

The EUR/USD plunged during the New York trading hours, falling below the psychological 1.5000 and is holding its position firmly under this level. The pair now stands at 1.4852 after opening the day at 1.5037 for a change of 1.2%. Driving the currency pair lower were slumping U.S. equity markets and sentiment that viewed the pair as significantly overbought.

Crude oil prices also did a 180 degree turn today as the price of the commodity rose during most of the European trading hours, only to violently drop upon entering the New York trading session. Triggering the downfall in the price was a slide in U.S. equities and the falling dollar.

The price of crude oil rose to a high of $81.58 before dropping below $80 and is currently trading at $78.65, or -1.4%. The Dow Jones Industrial Average has dropped close to1% today which as an influence on prices. Crude oil prices have been closely tracking the performance of the dollar and U.S. equity markets, rising when the dollar falls, and falling when the dollar rises. The commodity has relatively ignoring fundamental data that normally affects the commodity's price.

Is Gold Reaching Towards $1,020 an Ounce?

Traders watch out; following today's developments, gold's daily chart provides signals that an ounce of gold could be traded for $1,020 sooner than expected.

Point 1: A continuous of bearish crosses takes place on the Slow Stochastic, indicating that the momentum is bearish. Point 2: A change of trends can be observed on the MACD. When a bearish cross takes place on such a high level, it tends to indicate a trend reversal. Point 3: The RSI has picked at the Over-Bought Zone, and is not pointing back down, with potential to reach the 30 line. The trend is likely to continue with it. Point 4: The next support level is located at the $1,034 price. If gold will drop below it, a sharp drop might be ignited, as the next significant support level is located at the $1,020 price.