Mid-Week Technical Outlook: Breakouts In Focus

European shares struggled for direction on Wednesday as investors awaited corporate earnings for fresh directional cues ahead of a busy week for financial markets.

The overall mood has been dampened by mass layoffs in the tech space and signs of slowing global growth. With recession fears sapping risk appetite, stock markets remain vulnerable to further losses. In the currency space, the dollar seems to be drawing strength from risk aversion – dragging other G10 currencies lower. Regarding commodities, oil prices remain shaky while gold has slipped from a nine-month high.

Some trading opportunities may be forming during this period of uneasy calm and growing tension. Our tool of choice this afternoon will be technical analysis with our focus falling on currencies, commodities, and indices.

GBPUSD trapped within range

It has been a choppy affair for the GBPUSD over the past few days. Prices remain trapped within a range with support at 1.2150 and resistance at 1.2450. A breakout could be on the horizon but this may need the assistance of a fresh directional catalyst. Although prices are trading above the 50, 100, and 200-day SMA, bears seem to be back in the vicinity. Prices may test the 1.2150 level in the short to medium term. A breakdown below this point could open a path back toward 1.2000.

USDJPY to resume downside

USDJPY remains under pressure on the weekly timeframe as there have been consistently lower lows and lower highs. Prices are trading below 130.00 and could challenge 126.50 in the short to medium term. A strong breakdown below 126.50 may open the doors toward 122.00. If prices are able to push back above 130.00, the next key point can be found at 133.20.

AUDUSD approaches resistance

Aussie bulls continue to draw strength from dollar weakness. After breaking above the 0.7000 level, prices have pushed higher, with 0.7135 acting as a key point of interest. A breakout above this level could suggest an incline towards 0.7250. Should prices slip back below 0.7000, the AUDUSD may decline toward 0.6900.

USDCAD gearing for breakdown?

USDCAD could be on the brink of a breakdown as prices wobble above the 1.3350 support level. A solid move below this point could open the doors towards 1.3240 and potentially lower. Should 1.3350 prove to be reliable support, a rebound back toward 1.3500 could be on the cards.

Gold bull’s still in control

Zooming out on the weekly charts, gold remains firmly bullish on the weekly timeframe. There have been consistently higher highs and higher lows while the MACD trades above zero. A solid breakout and weekly close above $1940 may trigger an incline toward the psychological $2000 level. Should $1940 prove to be a tough nut to crack, the precious metal may dip back toward $1900.

S&P 500 remains rangebound

The S&P500 has been trapped within a wide range since May 2022. May support can be found around 3600 and resistance at 4300 on the monthly timeframe. Given the various fundamental forces influencing global sentiment, a breakout could be on the horizon. A strong breakout above 4300 could open a path towards 4819.5. Alternatively, a selloff below 3600 could signal a further decline towards 3250.