I’ve got a couple of breakouts and a classic break-and-retest play lined up for y’all on EUR/JPY, GBP/JPY, and EUR/GBP this week. Don’t forget to keep close tabs on the potential inflection points, too!
It looks like EUR/JPY is aiming for more gains as it broke past the top of its rising wedge consolidation pattern visible on the 4-hour time frame. This formation is a little over a thousand pips tall, so the resulting uptrend could be of the same height.
If you look close enough, a small bullish flag formation can be seen, signaling a likely continuation of the rally. But if buyers need to gather more steam, a pullback to the broken wedge resistance around the 132.00 mark could draw more euro bulls in.
- WO: 132.52
- Top WATR: 133.63
- Bottom WATR: 131.42
- PWH: 133.10
- PWL: 129.72
What a breakout! Not only did Guppy break past the neckline of the inverse head and shoulders pattern in my Weekly FX Crosses Watch early last week, but it also busted through the long-term ascending triangle resistance highlighted in my latest trade watchlist.
This signals that the pair could be in for a long-term uptrend from here, but stochastic is already dipping into the overbought zone to signal a potential pullback. If so, the broken triangle resistance around the 148.00 mark could be tested before price heads any further north.
- WO: 150.62
- Top WATR: 152.21
- Bottom WATR: 149.04
- PWH: 151.55
- PWL: 142.60
Pound bulls sprang back to action after last week’s top-tier U.K. events, taking EUR/GBP below the rising trend line I was looking at. The selloff was enough to take price down to the long-term area of interest around the .8700-.8800 levels, which line up with the 61.8% and 50% Fibs, respectively.Stochastic is already indicating oversold conditions, which means that sellers might be feeling exhausted from the dive. This oscillator has yet to pull up to indicate a pickup in buying pressure, though.
If that happens, EUR/GBP could still make its way back up to the swing high around the .9300 mark. But if the pound stays strongly supported, the pair could find its way down to the next floor near .8350.
- WO: .8792
- Top WATR: .8865
- Bottom WATR .8719
- PWH: .9122
- PWL: .8774
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