Is that a double top I see on the EURJPY? Yes it is! After topping out around the 125.00 price level, the pair fell and wavered around the neckline support at 123.25 before finally breaking down last Friday. If selling pressure remains strong, it could shoot all the way down to test former lows at 121.50. However, with stochastics near oversold conditions, we may see a retracement back up, with pricing finding resistance at the former neckline at 123.25.
Next, let’s take a look at Cable. The GBPUSD appears to be forming a broadening formation, with price sitting just above the rising support line right now. With stochastics indicating that the pair is deeply oversold, will we see buyers jump back in and buy that sucker up? If they do, we could see price rise up to test former resistance at 1.5200 or even higher up to the top of the formation at 1.5450. On the other hand, if sellers gun for a break of support, they could bring price back down to test former lows at 1.4880 and 1.4780.
It looks like the falling trend line resistance I pointed out on the AUDUSD daily chart a couple of days ago held. With price just bouncing from resistance and stochastics pointing downwards, would we see price fall to last month’s low and maybe even all the way to the major trend line support? Perhaps… but before that, watch out if buyers start jumping in the psychological significant 0.9000 handle. This price level has provided some minor resistance for the pair before and could now serve as a buy area for the bulls who missed the move upwards.