EUR/USD continues to rise, yet resistance is in view
The euro has enjoyed a particularly strong week so far, gaining 1.8% against the dollar since Monday’s open. This upside in EUR/USD looks set to continue for now, but the pair is approaching a major resistance zone which has medium-term technical implications.
The two peaks from late July of $1.1115 and $1.113 form a zone, which if broken would complete a double bottom formation. This would then activate an upside projection of $1.146 (the height of the double bottom projected higher). This coincides with the May high.
I remain bearish over the long-term and given the implications of a move above $1.113, I would expect to see some sort of bearish reaction in the near future. Thus I prefer to hold off and await a possible selloff in the $1.1115-1.113 zone. Intraday reversal patterns would be my dominant tool around that area. A move above $1.113 would be a notable bullish move and would look towards the next major resistance of $1.122.
USD/JPY breaking towards crucial support
We has seen a sharp depreciation in USD/JPY this week, following a move higher to an ascending trendline from early July. The outlook for USD/JPY from a monetary policy standpoint is clear, yet the technical has not been as one sided.
Nevertheless, price action is moving higher in general over recent months, trading within a rising wedge. Given the continued creation of higher lows and highs, I would expect this to continue and thus the support zone between Y124.14 and Y124.38 is likely to provide another move higher. Thus I am bullish unless price moves below Y124.14
AUD/NZD trades lower and further losses expected
The unpredictability of the dollar of late has pushed me towards other markets. The AUD/NZD has been trading within a descending channel in recent months and this is likely to continue.
Yesterday we looked at the daily chart, but this hourly chart shows a clearly defined selloff in place. The 50-hour simple moving average is providing a good approximate resistance point for any temporary upside and whilst I am bearish, I see any move back towards the 20- and 50-hour SMA as better points of entry.