Looks like EUR/GBP’s rallies will have to pause for now, as the pair is currently hitting the ceiling near the .7400 major psychological resistance. If this keeps gains in check, price could head back to the bottom of the range at the .7050 minor psychological support or at least until the middle around .7200-.7250. Stochastic is already indicating overbought conditions and is turning lower, confirming that buyers need to take a break and let sellers take over. Take note, however, that the 100 SMA just crossed above the 200 SMA, suggesting that further gains are possible. Be on the lookout for a candle close above the .7400-.7450 area if you’re hoping to catch an upside breakout!
Was that a double top breakdown or what? EUR/JPY created this reversal chart pattern on its 1-hour forex chart and price already dipped way below the neckline at the 137.00 handle when things got volatile. However, the pair soon landed back above the support area, which means that the breakdown and potential selloff ain’t confirmed yet. The 100 SMA is still below the 200 SMA, indicating that a downtrend is possible, but stochastic is on the move up so euro bulls might be in charge for now. If buyers stay on top of their game, EUR/JPY could head back up to the 139.00 major psychological level to form another top. If price heads back below the neckline, a 200-pip drop might be in the cards.
Finally a breakout for Cable! The pair had been consolidating inside a rising wedge for more than a month already, before it picked a direction and headed north. This could be a sign that GBP/USD is in for more forex gains, possibly around 350-400 pips or the same size as the wedge formation. Stochastic is nearly in the overbought zone, which means that pound bulls might need to take it easy from here and probably allow a pullback to the broken wedge resistance at the 1.5700 major psychological mark to occur. The moving averages also confirm that further rallies are likely since the 100 SMA is treading above the longer-term 200 SMA.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.