Trends are still looking mighty fine on EUR/JPY, GBP/JPY, and EUR/GBP. I’m also seeing a few potential opportunities to catch momentum!
I’m not seeing a lot of direction so far from EUR/JPY since its channel bounce the other week, but zooming in to the short-term chart shows a potential selloff signal.
Price has formed a double top with the neckline around the 135.00 major psychological support. A break below this level could spur a drop of at least a hundred pips and encourage more euro bears to sustain the selloff.
However, price has gapped higher over the weekend on positive updates regarding German coalition talks. In that case, euro bulls could put up a strong fight and push for another test of the tops at 136.00.
Guppy is still on a tear and has surged past the short-term barrier at the 153.00 major psychological mark. After reaching a high of 154.58, price appears to be making a correction to the broken resistance.
Applying the Fib retracement tool on the latest swing low and high shows that the area of interest is somewhere around the 38.2% to 50% levels. Stochastic is heading south, which suggests that the pair could follow suit and bounce once oversold conditions are seen.
Last week’s U.K. reports turned out mostly bullish for the pound and this week has the preliminary GDP due.
EUR/GBP completed its pullback from the rising wedge pattern highlighted in earlier posts and is now testing the neckline of a new double top formation.
A break below the support at the .8800 handle could draw more sellers to the game and allow the pair to tumble until the longer-term channel support at .8600.
However, stochastic is pulling up from the oversold region to signal a pickup in bullish momentum. If the channel resistance around .8900 gives way, a reversal could be due.
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