Consolidation is the name of the game for EUR/GBP, EUR/JPY, and GBP/JPY lately as I’m seeing a range and a couple of triangles on their charts.
EUR/JPY already bounced off support around 131.85 last week but hit a roadblock at the middle of its range then turned right back down.
The floor is still holding, though, and the pair might have another shot at gunning for the top of the range at 134.40. Stochastic is heading north but already dipping into overbought territory, which signals exhaustion among bulls and a potential return in bearish pressure.
In that case, a downside break of support is still a possibility, and this could take price down by around 255 pips or the same height as the rectangle pattern.
- WO: 132.29
- Top WATR: 133.29
- Bottom WATR: 131.29
- PWH: 133.12
- PWL: 131.39
Pound traders don’t seem ready to make their mind up yet, as Guppy has formed lower highs and higher lows to create a symmetrical triangle on its 4-hour time frame.
Price is bouncing off support and might be due for a test of resistance soon. If bulls are strong enough, they could charge past the triangle resistance around the 150.50 minor psychological level and go for around 600 pips in gains or the same height as the triangle.
Similarly, a downside break from support around the 149.00 mark could lead to a drop of roughly 600 pips.
- WO: 149.41
- Top WATR: 150.79
- Bottom WATR: 148.04
- PWH: 150.33
- PWL: 148.46
So much for that double bottom I was lookin’ at last week! EUR/GBP didn’t really exhibit much bullish momentum to break past the neckline and go for a climb.Instead, price has formed another lower high to create a descending triangle pattern on its 4-hour time frame. Price looks prime for another test of resistance around the .8900 handle while stochastic is nearing overbought levels.
This consolidation could go on for a while, but if you’re waiting for a breakout, this one might be in for either a 300-pip rally or selloff, depending on which direction it picks.
- WO: .8856
- Top WATR: .8927
- Bottom WATR .8786
- PWH: .8889
- PWL: .8792
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