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I’m seeing classic reversal formations on EUR/JPY and GBP/JPY while EUR/GBP is sitting right on a make-or-break level. Check out my game plans for these crosses this week!

EUR/JPY

EUR/JPY 4-hour Forex Chart
EUR/JPY 1-hour Forex Chart

It’s not a very clean one but I’m seeing a head and shoulders chart pattern that just formed on EUR/JPY’s short-term time frame. Price is already testing the neckline around 129.75 and a breakdown could send the pair lower by around 200 pips or the same height as the formation.

Stochastic is already indicating oversold conditions and is starting to head higher, suggesting that buyers might still put up a fight. There’s not much in the way of top-tier euro zone data this week, but expectations of an ECB taper announcement in October or December might keep the shared currency supported.

  • WO: 130.06
  • Top WATR: 131.13
  • Bottom WATR: 128.99
  • PWH: 131.10
  • PWL: 129.36

GBP/JPY

GBP/JPY 1-hour Forex Chart
GBP/JPY 4-hour Forex Chart

Guppy hasn’t made much downside momentum since breaking below the longer-term ascending triangle pattern and bobbing up for a retest. The pair is now signaling that pound bulls are revving up for a stronger charge as a complex inverse head and shoulders pattern is forming.

Price is also testing the neckline of the reversal formation at the 142.25 area and an upside break could send it higher by around 400 pips or the same size as the chart pattern. Stochastic is pointing up to suggest that buying pressure is in play.

However, sterling has a lot to contend with this week as top-tier catalysts like the CPI and jobs report, not to mention the BOE decision and Inflation Report, are on the docket. Cautious remarks from policymakers pertaining to weak price pressures and Brexit could revive pound weakness while words of confidence could spur gains.

  • WO: 142.72
  • Top WATR: 144.05
  • Bottom WATR: 141.40
  • PWH: 142.69
  • PWL: 141.21

EUR/GBP

EUR/GBP 4-hour Forex Chart
EUR/GBP 4-hour Forex Chart

It looks like that ascending trend line play I highlighted in my earlier Weekly FX Crosses Watch blog post is finally lining up. Price is now testing support around the .9100 major psychological level, 38.2% Fib, and the trend line itself.

A bounce could allow the uptrend to resume while a break lower could still draw support from the lower Fib levels. A strong break below the .9000 major psychological mark, on the other hand, could signal that sellers have regained the upper hand and could push for a reversal from the uptrend.

  • WO: .9114
  • Top WATR: .9179
  • Bottom WATR .9050
  • PWH: .9226
  • PWL: .9110

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