I spy with my one good eye a couple of trend continuation plays on the yen pairs and a classic break-and-retest setup on EUR/GBP. Take a look!
Last week’s pullback play to a rising trend line turned out to be an ascending channel bounce. And scrolling back shows that this has been holdin’ like a boss since July last year!
Price has made it past the mid-channel area of interest, which suggests that it has enough momentum to climb to the resistance around the 137.00 handle.
Stochastic is pointing up to show that buyers are in control, but the oscillator is already dipping into overbought territory. A return in selling pressure could lead to another test of the channel support.
Guppy was also able to climb past its mid-channel area of interest on its new ascending channel on the 1-hour time frame. A quick pullback to this resistance-turned-support zone appears to be taking place before pound bulls charge again.Stochastic looks ready to turn from the overbought region to indicate a return in bearish momentum, possibly even leading to another test of the channel support at the 150.50 minor psychological mark.
The U.K. has a couple of top-tier reports, namely the CPI and retail sales data, lined up for the week. Stronger than expected data could keep this uptrend intact.
EUR/GBP broke below the rising wedge last week and has since pulled up for a retest of the broken support. Applying the Fib tool on the latest swing high and low shows that price may have surged a bit higher but is now back within the correction zone.
If sellers stay in control, the pair could head back down to the swing low at .8814 or lower. Stochastic is on its way down after all, which means that bearish momentum is already in play.
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