Chart of the Day: EUR/USD
EUR/USD: The EUR/USD is starting to show some positive signs of reversal, as prices begin the week with an upside break of its medium term downtrend channel (which began in early February). The first critical level on the short term charts was seen at 1.2970, and this area is expected to be resistance turned support to start the week. A downside break here suggests sideways trading but if we are able to overcome resistance at 1.3040, the next upside target is above 1.31.
EUR/JPY: The EUR/JPY is caught in a descending triangle on the short term charts but after the strong bounce from support at 121.60, the focus is clearly on the upside. Next resistance is seen at 123.85, followed by 124.40 but if these levels are tested, the descending triangle would have been removed and buying on dips will be the preferred strategy. 121.60 is now a triple bottom, so we will need to see a break here in order to expect fresh downside momentum. It should be noted, however, that prices are currently trading alongside the 100/200 period EMAs on the 4H charts, so it would not be surprising to see some stalling in this area.
USD/JPY: The USD/JPY is starting to look very top heavy on the medium time frames, with prices unable to post much of a bounce from the critical support region at 94.30. This area is a double bottom but we are coming close to a third test and the pair is unlikely to contain prices if we do see that third test. Downside breaks here will target 93.60 first (an area of resistance turned support). To the upside resistance can be found at 94.90 first, and this is an acceptable level to enter into short term sell positions.
GBP/USD: The GBP/USD is stalling in the 1.5260 area after posting a strong rally last week. But given the fact that 1.5260 is the 23.6% Fib retracement of the move from 1.6340 (a major triple top resistance), some difficulty posting gains is not altogether surprising. First support comes in at 1.5165, and if we do see a break here, expect a test of the March lows in the coming weeks.