I’ve got a mix of long-term and short-term plays on EUR/JPY, GBP/JPY, and EUR/GBP this week, so take your pick! Think the trends will continue or is it time for reversals?
The Force is strong with this one… the bearish force, that is! Price completed that correction we were eyeing last week and looks ready for another one.
The pair is still inside its descending channel formation and is bouncing off support, possibly priming for a pullback to the Fib levels near the resistance. In particular, the 50% to 61.8% levels are close to the top and a former support area.
Stochastic is already turning south, though, which suggests that sellers are eager to push price back down to the swing low around 129.50 or to the channel bottom closer to 132.00.
Guppy had a sharp tumble last week as Brexit concerns resurfaced when the EU draft agreement was released. Price broke below that short-term consolidation around 149.00 to test the next long-term floor.
The selloff seems to be stalling right here as the 145.00-145.50 area is right around the bottom of its ascending channel visible on the daily time frame. This also coincides with a former resistance level, which might now hold as support.
At the same time, stochastic is indicating oversold conditions but has yet to move higher to reflect a return in buying pressure. This means that a downside break is still a possibility, likely leading to yet another leg lower for the pair.
Now this pound pair has already made its break! Price busted through the top of its daily descending channel in a bullish breakout, which signals that a reversal is underway.
Stochastic is still on the move up to show that buyers have enough energy to push for more gains, probably taking the pair up to the next long-term barrier around the .9000 handle.
But if euro bulls aren’t quite ready to make a full charge yet, EUR/GBP could still pull back to the broken channel resistance around .8875 before pushing price further north. Note that we’ve got the ECB decision on this week’s docket, so it could be a volatile time for euro pairs!
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