I’m kicking off today’s blog post with a nice simple setup on the EURUSD. As you can see, the pair found a temporary floor at 1.2235 and is now starting to retrace some its losses. I don’t know how far up the pair would go, but expect to see a lot of selling pressure on the 38.2% Fibonacci retracement, as that level lines up with the previous week’s low. Remember, whenever price passes through support, that level normally becomes resistance.
Almost the exact same setup could be found on the Cable. After swimming in oversold territory for awhile, stochastics is now crawling its way back up. If the pair continues with its upmove, the pair would most likely trek all the way to the 50% Fibonacci retracement level before it encounters resistance. Just like the EURUSD, this Fib level nicely coincides with the previous week low, which could serve as an entry point the bears who want to jump in the overall downtrend.
Lastly, lets end with a look at key support and resistance levels on the USDJPY. For the past couple of days, the pair has been stuck in box, trading between support and resistance at 91.80 and 93.50. If buyers decided to take control of the situation, look for a break to the top, with buyers setting their targets for the rising trend line resistance around the 95.00 handle. On the other hand, if sellers decide its their time to shine, they could bring price back down to test a previous support level at 90.00.