EUR/USD Leads in Completing Consolidation

The market has been consolidating for the last couple of weeks. As the market consolidates, imbalances build up like potential energy, and when confirmations start working like a feedback mechanism, the market accelerates to another level where the bullish and bearish forces are balanced. In this context, pairs such as EUR/USD are ready to find another pivot. Commodity currencies are still consolidating. Japanese yen crosses sensitive to risk sentiment are also still within consolidation. So it appears that the EUR/USD pair is taking the lead in continuing the trend before the last 2 weeks. If other pairs fail to follow, and instead reverses, the outlook for EUR/USD or the scale of its decline may need to be adjusted.

EUR/USD Supported at 1.2150

• Daily and 4H: The EUR/USD finally broke below the 121.50 and 121 support with force. No need to repeat details, the target is 1.17.
• The 4H chart shows the market pushing lower in a declining channel. Some pullback should help confirm. Anticipate some support near the 119.0 area.

USD/JPY Tops Off Below 93 (Link)

GBP/USD Stalking Consolidation

• Daily and 4H: We were stalking the correction rally last week. Looking at the 4H chart, a channel break out projection to 1.47 was reached and the market topped before reaching 1.48. After a double top, the market is starting to declining.
• The current decline should see some support at 1.4450, the 61.8% retracement level.
• Another support after that is the 1.42 area.
• The daily chart shows good reversal candlestick combination after hitting 38.2% retracement of the decline from 1.55. This is coincident with the 61.8% retracement of the smaller swing seen in the 4H chart from 1.5050.
• The daily chart also shows a negative reversal, which suggests the swing projection to 1.40.
• Don’t rule out the continuing rally correction scenario, which should be considered if the market can rally back above 1.4650. This should target 1.48.

USD/CAD Continuing Rally Scenario to 1.10

• Daily and 4H: The USD/CAD looked like it was topping last week, and some support levels were established to follow the decline, which materialized. This decline came to the 1.40 area as anticipated, although that was only the conservative target.
• Looking at the 4H chart, we saw that the market broke below 1.55 and stayed consolidating for first half of the week, until it broke below with a strong move on Wednesday.
• The market has then rallied (not just a  pullback), so the bearish scenario from yesterday’s video post is now invalid. A break above 60 in the RSI and a break above 1.55 in price should further negate any bearish outlook and improve probability of a bullish scenario.
• The bullish scenario can be seen in the daily chart and targets 1.10. This is suggested by a positive reversal with the RSI.
• For now the target in the short-term should be 1.0850 if the market breaks above 1.55.

EUR/GBP Negative Reversal Target Hit

• Daily and 4H: Let’s stalk by a look at the daily. Last week, the EUR/GBP was projected to 0.8350 as suggested by a negative RSI reversal, but the 0.8430 held. A break below this was anticipated as a signal to 0.8350.
• This week, the market came to the 0.8350 level and in the 4H chart, you can see a minor consolidation, with the market attempting to break below it today with a strong bearish candle in the early US session.
• A stretch of the current decline should see some support at 0.82.

AUD/USD To Retest Support near 0.81

• Daily and 4H: The AUD/USD has been consolidating. It failed to rally above the consolidation high at 0.8550 seen in the 4H chart.
• The market is currently testing 0.8250, 61.8% retracement. A break below should provide a vacuum until 0.81, a very important support. If broken, the market can extend lower to 0.78.
• There might be a minor rally to start next week from the current support level. Watch this bounce. If indeed it is minor, the bearish scenario is more likely. But if the market rallies above 0.8450, the market is NOT ready to continue lower yet.

GBP/JPY:  Still Resolving Correction

• Daily and 4H: The GBP/JPY came to the 136.50 level and topped off. The daily chart shows a strong reversal candlestick combination after hitting 50% of the latest downswing.
• The RSI sets up a negative reversal, suggesting a swing to 123.
• The 4H chart shows the market diving after breaking below 134.50 area.
• Support exists near 131, then 127 area. In following the bearish scenario, these are areas of interest for considering reduction in position size or deploy exit-re-entry tactics.

Fan Yang
Currency Analyst
Commodity Trading Advisor
fyang@fxtimes.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.