Let’s take a look back on my favorite cross – the EURJPY! As I pointed out last week, a triple top formation had formed on the daily chart of the pair. Last week however, we saw a strong move, which broke the neckline support! Could this now act as a resistance line? Right now, the pair is currently sitting below former lows at 131.00. With stochastics showing oversold conditions, sellers may be running out of steam to bring the pair lower in the meantime. If buyers do push to bring price back up, we could see resistance around 132.00, which would coincide with the former neckline. On the other hand, if sellers are still keen on pushing price down, we could see price test support at psychologically round numbers at 130.00 and 129.00.
The USDCHF pair traded within an ascending channel for more than a week but, last Friday, we saw this pair drop out of the channel and dip to a low of 1.0310. With the stochastic attempting to climb out of the oversold region, some upward price action could ensue. The question is: Until where? The pair could encounter resistance at the psychologically significant 1.0400 level, which is nearly in line with the bottom of the ascending channel. Or maybe the upward momentum could be strong enough to place the pair back inside the channel.
Now let’s head on over to the EURUSD hourly chart. The most important thing to point out on the chart is the falling trend line that I drew. A lot of traders are probably watching this area as has provided both resistance and support for the pair. If the pair’s short-term downward trend to continue, we might see retests of both 1.4500 and falling trend line support at 1.4400-1.4450. On the other hand, if the pair attempts to rally, watch out for potential resistance somewhere around the previous week high at 1.4675-1.4700.