DXY Rebound, Gold Adjustment and EUR/GBP Outlook

Greetings to all, and a fine afternoon to you. As we enter the penultimate week of the year, it's Monday, December 18, 2023, and let's delve into the current state of the forex market.

Current Market Overview

Last Friday concluded with a net gain of approximately $3,000, bringing the valuation to a comfortable $626,000. The markets are quieter today, which is typical as we draw closer to Christmas Eve. With a sparse economic calendar and fewer statements from central bank officials and national leaders, technical analysis takes center stage this week.

U.S. Dollar Index (DXY) Outlook

Market Behavior

The DXY demonstrated resilience last Friday, probing the depths before making a rebound. Observing today's daily chart, there's an inclination towards a modest continuation of this rebound. Given it's the start of the week, we might expect subdued volatility.

Trading Strategy

For the U.S. Dollar, the advisable approach is to seek long positions on dips. A strategic entry point could be pegged around the 102.2 mark.

Gold Market Analysis

Recent Movements

Gold presented a rally before retreating last Friday, hinting at a pullback rather than breaking new ground.

The trend did not reach a new high, and as observed from the daily chart, gold seems to be in a further adjustment phase.

Trading Strategy

Today, gold might persist in this adjustment phase.

Looking at today alone, gold might undergo further adjustment, and after today's candlestick is completed, we can reassess the trend for tomorrow and the day after.

With this outlook, a viable strategy would be to take short positions on any rebounds, targeting entry points near the 2033 or 2034 levels.

Crude Oil Trading Insights

Weekly Chart Indications

The weekly chart for crude oil emitted a robust bullish signal, characterized by a lengthy wick that probed the body of the previous candlestick. This hints at a potential uptrend in the near term.

Trading Strategy

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For crude oil, the recommended tactic is to consider long positions following pullbacks. An apt entry could be identified just above last week's retracement, around 70.9.

This indicates a consideration to initiate a long position in crude oil.

Euro (EUR) Market Strategy

Chart Analysis

Yesterday's bearish candle on the daily chart for the Euro suggests a bearish undertone for the currency.

Trading Strategy

Given the bearish signal suggested by the large bearish candle on the daily chart, the strategy would be to consider selling the Euro, specifically initiating short positions during price rallies. The identified potential entry point for executing such a trade is around the 1.0955 level. 

This means that if the price of the Euro rallies to around 1.0955, it could be an opportune moment to enter a short position, betting on the currency's value to decline.

British Pound (GBP) Outlook

Technical Perspective

The GBP also displayed a significant bearish candle on the daily chart, mirroring the sentiment reflected in the Euro's chart.

Trading Strategy

The presence of a significant bearish candle on the daily chart indicates a bearish sentiment for GBP, similar to the Euro. Consistent with this technical perspective, the strategy would involve selling the GBP on any price rebounds. 

In practical terms, this means you should consider entering a short position if the GBP price rallies to around the 1.274 level. This approach is based on the expectation that after the rebound, the price will likely resume its downward trend, potentially yielding profits from the short position.

Summary of Strategies for December 18, 2023

• U.S. Dollar (USD): Look for long opportunities on dips, targeting the 102.2 level.
• Gold: Adopt a short position on rebounds, with a focus on the 2034 level.
• Crude Oil: Long positions on pullbacks are advisable, aiming for an entry around 70.9.
• Euro (EUR): Sell on rallies, with 1.0955 as the potential short entry point.
• British Pound (GBP): Short positions on rebounds are recommended, eyeing an entry around 1.274.

As we proceed through the day's trading, these strategies aim to navigate the subdued market activity and capitalize on the technical setups presented.

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