After seeing big moves on the crosses last week, it’s all about trend retracements on EUR/JPY, GBP/JPY, and EUR/GBP this time. But will risk aversion grab the wheel from here?
It’s a classic break-and-retest setup, forex fellas! After breaking past the descending channel resistance a few days back, EUR/JPY is making a correction play around the area of interest near the 50% Fibonacci retracement level.
Price gapped down over the weekend on news of another missile launch test by North Korea, leading more than a few market watchers to worry about an actual strike happening anytime soon. This means that the pair could be in for a deeper pullback, possibly until the 129.00 major psychological support just below the 61.8% Fib.
- WO: 130.83
- Top WATR: 131.94
- Bottom WATR: 129.73
- PWH: 131.72
- PWL: 129.65
That watchlist play I posted last week still seems to be materializing as price is testing the 38.2% Fib but might have some room to head up to the higher retracement levels.In particular, the 61.8% level coincides with the broken long-term triangle support and the 144.50 minor psychological mark, which might be the line in the sand for this correction.
Stochastic is lingering around the overbought zone but looks ready to head south so the pair might follow suit. If the selloff resumes, price could dip to the swing low or much lower.
- WO: 141.99
- Top WATR: 143.40
- Bottom WATR: 140.58
- PWH: 143.00
- PWL: 140.02
EUR/GBP broke below a short-term ascending trend line but is still safely above the longer-term rising support that has connected price lows since May this year.
Applying the Fib tool on the swing high and low on the 4-hour chart shows that the 38.2% level lines up with this trend line and the .9100 major psychological level. A bullish divergence can also be observed as price made higher lows while stochastic had lower lows.
- WO: .9169
- Top WATR: .9235
- Bottom WATR .9103
- PWH: .9360
- PWL: .9150
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