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FX levels to watch – EUR/USD, GBP/USD, USD/JPY, USD/CAD

EUR/USD is showing signs of a possible bullish reversal, while questions are being asked of the short-term bullish movements in USD/JPY and GBP/USD.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
EUR/USD forex pair
Source: Bloomberg

EUR/USD reversal developing
EUR/USD has been showing possible bullish reversal signals over recent days, with the pair breaking through the key $1.1050 resistance level. These reversal signs are coming from the Wednesday sell-off which hit a crucial cluster of support, with two trendlines coupled with a 61.8% Fibonacci retracement.

Given the existence of that level, coupled with the gradual creation of new higher highs and higher lows, it seems likely the current move lower is unlikely to last beyond $1.1015. Thus a bullish view is in play, for another move higher with initial resistance levels at $1.1059, $1.1068 and $1.1086.

Alternately, an hourly close below $1.1015 would provide a sign of weakness, where any further downside would look towards $1.0990 and $1.0967 as the next support levels. 

GBP/USD resurgence unlikely to last
GBP/USD has finally managed to find a buyer, with the pair gaining a brief respite from the incessant selling that has characterised the pair of late. That said, while we are creating new intraday highs, the shallow nature of this pullback is telling.

With a countertrend move devoid of steepness, we are likely to simply be seeing a retracement rather than some form of reversal. Thus a bearish view remains and we await signs of a bearish reversal to confirm that view.

Interesting resistance levels to watch for such a move lower are the 50% retracement at $1.4017 and the 61.8% pullback at $1.4058. The former has provided resistance today, while the latter coincides with Monday’s low of $1.4058.

A bullish view that extends past the very short-term would only come with a break back through $1.4168. 

USD/JPY rally gains steam
USD/JPY has seen a fairly consistent uptrend throughout the past two days, with the pair moving towards the crucial Y113.37 resistance level. On the hourly chart, there is a clear basis for another move higher, as long as we do not see a break back below Y112.54.

However, it is worth bearing in mind the four-hour chart shows a market that still remains within a downtrend, which would only be negated with a break through 113.37 resistance. The 50-period (four-hour) chart is also providing strong resistance around the 113.00 levels.

As such, while we have a bullish short-term look, it seems a safer bet to await a break through 113.37 and if we continue to trend in the current fashion, then the current strength should be more reliable.

Key resistance levels are 113.20, 113.37 and 114.39. A break back below 112.54 would look towards 112.30 and 112.00 as the next near-term support levels. 

USD/CAD consolidates following crash
USD/CAD saw a massive move lower yesterday, with a break back below the C$1.3639 level. Interestingly, we are now seeing a short-term rectangle pattern, which provides us with clearly defined support and resistance. Given the bearish move into this pattern, the exit is likely to also be to the downside.

Thus a bearish view is in play unless price closes back above C$1.3550. Above C$1.3550, the next resistance levels are C$1.3639 and C$1.3653. To the downside, support levels to watch are C$1.3517and C$1.3457.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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