GBP/USD bounced off the established support level around 1.5950 in yesterday’s trading, as the UK printed a better than expected services PMI figure. The pair was also able to break above the 1.6000 major psychological level then consolidate at 1.6050.
At the moment, GBP/USD is forming a bullish flag pattern, which hints at a rally continuation. Manufacturing production and Halifax HPI are both due from the UK today and these could serve as catalysts for a stronger rally or a potential selloff.
Setting a long order at the top of the consolidation pattern (1.6075) could catch the momentum of an upside move, possibly until the 1.6150 minor psychological resistance or the top of the range around 1.6200.
A short order below consolidation (1.6025) could catch the selloff, possibly until the bottom of the range again at 1.5950.
NZD/JPY is about halfway through in climbing to the top of its range on the 4-hour time frame. The pair is approaching the 83.50 minor psychological level, which could hold as resistance.
Stochastic has made its way into the overbought region and has crossed down, indicating that Kiwi bears are ready to push the pair down. A selloff could take the pair back to the bottom of the range at the 80.50 minor psychological level or at least until the middle around 81.50.
Shorting at market with a stop above 83.50 and a target of 80.50 could serve as a good swing trade. More conservative traders could wait for the actual test of resistance for a better return on risk.
Thanks to the better than expected headline GDP figure released yesterday, USD/CHF surged up to the .9200 major psychological level which was in line with the 50% Fibonacci retracement level and the falling trend line on the 4-hour time frame.
Stochastic crossed down from the overbought region, hinting that dollar bears will push this pair down, possibly until the previous lows near .8950. Shorting at market with a stop above the previous spike to .9250 and a target of .8950 will give a 2-to-1 return on risk.
Events risks for today include the non-farm payrolls release, which is expected to print a weak reading because of the recent government shutdown.
After months of consolidation, USD/JPY finally seems ready to break out of its symmetrical triangle. As you can see on the pair’s daily chart, a long green candlestick has already closed above the triangle resistance, hinting that an uptrend is in the works.
The pattern is approximately a thousand pips in height, spanning from a high of 103.00 in May to a low of 93.00. Further rallies could last by roughly 1000 pips as well, but this could take place for months.
Going long at market with a stop below the triangle support and a target of roughly 1000 pips could be a good position setup with a high return on risk.
NZD/USD seems to have completed the head and shoulders formation on the 4-hour time frame, pending a break below the neckline around .8225. The pattern is roughly 300 pips in height, which suggests that the resulting breakdown could be of the same height.
Take note though that stochastic is already in the oversold zone, which suggests that Kiwi bears are taking a break. A strong catalyst could be needed for a stronger move lower.
Setting a sell stop below .8200 might be a good idea for a conservative entry and a stop above .8250 should be able to weather additional volatility.
Despite the recent ECB interest rate cut, EUR/JPY has still managed to rally in the past few days. The pair has already climbed up to the 61.8% Fibonacci retracement level on the latest swing high and low on the 4-hour time frame, and this area could hold as resistance.
Stochastic is in the overbought zone, suggesting that euro bears are ready to push this pair back down. In addition, the Fib lines up with a former support area and the 134.00 major psychological level.
Shorting at market with a 50-pip stop and a target around the previous lows near 131.50 would yield a 5:1 return on risk.
A falling trend line can be seen connecting the highs of the price on AUD/USD’s 1-hour time frame, reflecting the ongoing downtrend for the pair. It has just bounced off the .9300 major psychological level and appears ready to test the trend line.
Resistance could hold at the 38.2% to 50% Fib area, as this lines up with the trend line and the .9400 major psychological level. Stochastic is still in the overbought area but hasn’t crossed down, suggesting that Aussie bulls have run out of buying power but that bears aren’t quite ready to push this pair back down.
Shorting at .9400 with a stop above the trend line or 61.8% Fibonacci retracement level and a target of new lows could yield a good return on risk for a short-term trade. Moving the stop to entry once the pair tests the previous lows around .9300 could protect profits.
EUR/AUD might be ready to resume its drop, as the pair is testing the top of a falling channel on its 4-hour time frame. Stochastic is pointing down from the overbought region, indicating that bears are ready to push the pair lower.
Zooming back a little further shows that the 1.4450 to 1.4500 area lines up with an area of interest. It has served as the neckline of a double top pattern a few months back and has been acting as resistance for a while after the breakdown.
Shorting at market with a wide stop above 1.4550 could give this trade enough room to breathe. After all, this cross pair does tend to be volatile. Aiming for the bottom of the channel around 1.4100 would still yield a good return on risk.
Last week’s anti-dollar sentiment and relatively upbeat data from the U.K. has triggered a bounce from the bottom of the descending support level on GBP/USD, yet a descending resistance level can also be seen.
The pair is on its way to test the top of the falling channel on the 4-hour time frame while stochastic is indicating overbought conditions. Once the oscillator crosses below the oversold region, a selloff might take place as bears push the pair back to the middle or possibly the bottom of the channel.
Shorting around the top of the channel around 1.6150 with a stop above 1.6200 could mean at least a 4:1 return on risk, depending on how wide the stop is.
EUR/GBP has sold off in the past few days but the daily time frame seems to suggest that a bounce is in the cards. The pair is currently testing the bottom of the descending channel right around the .8400 major psychological support level.
Stochastic has moved out of the oversold region, suggesting that euro bulls are ready to push the pair back up to the top of the channel or probably just around the middle or its previous highs. A close above the .8400 level could mean that buying pressure is strong and that the pair could climb at least to the .8500 mark.
Going long at market with a stop below the channel or .8300 could be at least a 1:1 trade with a target of .8500. Aiming for the top of the channel around .8600 could be a 2:1 return on risk.
