I’m seeing a fresh breakout and a couple of consolidation plays! Here’s what’s going on for EUR/JPY, GBP/JPY, and EUR/GBP.
EUR/JPY went up to that falling channel resistance I was eyeing last week alright, but bulls were strong enough to push for an upside breakout. This signals that a reversal from the earlier slide is in the cards.
However, stochastic is already in the overbought region, which means that buyers might want to take a break from the recent climb. A quick pullback to the broken channel resistance around the 124.00 major psychological level could take place before more bulls join in.
From there, the next resistance is located around the 125.50 to 126.00 levels. There’s not much in the way of top-tier releases from the region, though, so headlines and market sentiment could push this pair around.
- WO: 124.51
- Top WATR: 125.56
- Bottom WATR: 123.47
- PWH: 124.71
- PWL: 123.66
Things looking a bit less gloomy for the U.K. these days as Prime Minister Theresa May finally reached a coalition deal with the DUP to avoid a hung parliament situation.This could lead to more gains for sterling as the government now has a more united front in Brexit negotiations. To top it off, BOE officials have shifted to a more hawkish stance in their latest policy statement, so a rate hike might happen earlier than previously anticipated.
Guppy is in consolidation mode at the moment, still mulling whether to go for a test of support at the 136.50 minor psychological level or to make its way back up to the range resistance at 147.50. Stochastic is already indicating overbought conditions so sellers could have the upper hand soon.
- WO: 141.62
- Top WATR: 143.10
- Bottom WATR: 140.15
- PWH: 142.53
- PWL: 139.86
Consolidation is the name of the game for EUR/GBP, as the pair formed lower highs and higher lows to create a symmetrical triangle on its 4-hour time frame.
Price just bounced off support and is heading back up for another test of resistance. At the same time, stochastic is pointing up to show that buyers are on top of their game.
If resistance holds, a test of support could be seen again. On the other hand, an upside break of the .8825 area could be enough to show that an uptrend is about to happen, taking price up by an additional 200 pips or the same height as the triangle pattern.
- WO: .8793
- Top WATR: .8861
- Bottom WATR: .8725
- PWH: .8845
- PWL: .8735
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