The euro and pound both have a busy week ahead, so I checked out these short-term and long-term plays on GBP/AUD, EUR/NZD, and EUR/GBP. Get ’em while they’re fresh!
First up is a potential breakout on GBP/AUD’s 1-hour chart. The pair is trading about 30 pips away from the 1.8200 psychological handle that had been holding since mid-March.
Are we looking at a breakout or a fakeout? Stochastic is indicating oversold conditions, which suggests that bears are exhausted from charging and could let bulls take over from here. In that case, a move back to the 1.8330 mid-channel or 1.8450 channel resistance levels could take place.
But if the pair does extend its downside momentum, then we could be looking at potential retests of the previous areas of interest near the 1.8000 levels.
If you’re bearish on the Kiwi, you might like this pullback scenario better. EUR/NZD has been trending higher since the start of the month, and another correction seems possible.
The 1.1075 area is the level to watch, as it’s near a major resistance from early in the year and this week’s 38.2% Fibonacci retracement.
Stochastic looks ready to climb out of the oversold region already, which suggests that euro bulls could take over soon. I’m gonna be watchin’ Euro Zone’s catalysts this week to see if the bulls get enough momentum from the releases to extend the pair’s resistance breakout.
EUR/GBP is fast approaching the .8800 major psychological handle that lines up with a falling channel resistance and the 100 SMA.
With stochastic already flashing an overbought signal and even showing a small bearish divergence, the bears could step in and drag the pair back to the .8700 or even .8630 previous lows.
But if the pair extends its bullish momentum and breaks above the SMAs, then the bulls could push the pair back to the .9000 area of interest or the August 2017 highs near .9250.
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