Chart of the Day: EUR/USD
EUR/USD: The EUR/USD has broken the neckline of the medium term head and shoulders pattern we have been watching and this has led to heavy price action at the lower base of the recent ranges. Prices are trading sideways at this stage (with a moderate downward bias) but we will need to see a daily close below 1.2970 before the next major bear wave can be expected. Prices are still trading below their 100/200-hour EMA cluster so the momentum remains to the downside. First resistance is now seen at 1.3045.
USD/JPY: The USD/JPY is starting to roll over after retesting the yearly highs just south of the key psychological level at 100. Prices have now failed price at these levels, so we are seeing a double top at 99.90. Because of this, it is likely there are many stop losses for sell positions just above 100, and this will create a significant amount of upside momentum is these stop orders are filled (very bullish scenario). Prices have broken some key short term support levels, however, so we will probably see prices drop back to support at 95.80 before a significant upside move can be seen. The pair is still a buy on dips, so wait for prices to retrace back to the low 96s before getting into new long positions.
AUD/USD: The AUD/USD is creating a new downtrend channel after breaking critical medium term Fib support at 1.03. This area is the 61.8% Fib retracement of the rally from 1.0115 and the next medium term target is now seen with a full retracement of this move. This makes the AUD/USD a sell on rallies until support at 1.0115 is seen. To the topside, resistance is found at 1.0340, and if we see a break here the bias turns to neutral.
GBP/USD: The GBP/USD saw a major upside break last week, after the Fib resistance at 1.54 was broken. This area was the 38.2% Fib retracement of the move from 1.6340, and further gains are expected next week. Support for the pair has moved up to 1.5430, and this is now an acceptable entry level for long positions.