Let’s kick things off with a look at the GBPJPY! It appears that the falling trend line held yesterday, as the pair has backed off after testing it. The pair is now forming bearish divergence, with price registering lower highs, but stochastics showing higher highs. Could we see a down move soon? Quite possibly! Take note, however, that we could see a breakout take place soon, as the pair also appears to have formed a symmetrical triangle. If price action does fall, it could have a tough time breaking the rising support line, but if sellers are determined, they may bring price all the way down to the 134.00 handle. On the other hand, if we see a 4-hour candle close above the trend line, the pair could shoot up to test the former high around 139.40.
Next, lets move on to the AUDUSD. After touching a longer term descending trend line, the pair has backed off and now seems to be in the end of a head and shoulder formation. Currently, the pair is sitting just above 0.9060, which intersects with both the falling neckline, as well as a resistance turned support level. If this support holds, we could see the pair rise back up to test the highs of the shoulders at around 0.9200. However, if selling pressure kicks in and the neckline support breaks, price could begin a free fall all the way to 0.8800 price level!
It looks like the USDCAD is starting to retrace some of its losses from the last few weeks. This upward move doesn’t look like it would last long though. For one, price could find potential resistance at 1.0370, the 50% Fibonacci retracement level. In addition to coinciding with a Fib, that price level has also served as support prior to breaking. Remember, whenever price busts through support, that support level becomes resistance. Lastly, a bearish divergence starting to form, indicating a possible down move soon.