GBP/USD strength likely to return
Last week saw GBP/USD form a weekly doji with a long lower shadow, which given the recent selloff is a big sign the recent weakness could be about to reverse. Similarly, the short-term charts have seen price break back above the Tuesday high of $1.434 which provides us with another bullish indicator.
The key here is whether the current pullback creates a new higher low for a push through $1.4363 (Friday’s peak). That would be a very powerful bullish signal. However, for now, we are likely to see the pair drift lower to find another base and rally once more.
Support levels of note are $1.4230 and $1.4080, with resistance levels of $1.4340, $1.4363 and $1.4476.
USD/JPY turning lower – for now
USD/JPY saw a rally from the crucial ¥116.21 support level last week, with the second half of the week bringing a more bullish view given the break through ¥118.06 and ¥118.38 resistance. We are seeing this pair selloff heavily this morning, which looks like a temporary move to take back some of the gains last week.
Given the major reaction at ¥116.21, alongside a break above ¥118.38, it seems likely we will see a move higher before long. Yet for now, a closed hourly candle below ¥118.38 would provide a bearish short-term view to find a new higher base before we push back through ¥118.86 once more.
Support levels of note are at ¥118.06, ¥117.29 and ¥116.97. Resistance levels to note are ¥118.86, ¥119.70 and ¥120.00.
AUD/USD downside likely after failure swing
AUD/USD is on the verge of seeing yet another rally undone with the pair on the cusp of breaking a crucial support level. Thursday’s ascending wedge formation provided us with a bearish hint, which has subsequently been followed by a double top with a failure swing and break through neckline support.
As such, I expect to see selling ramped up heavily with a strong move to the downside in the early part of the week. Support levels of note are at $0.6960, $0.6938 and $0.6875. This view would be invalidated with a closed hourly candle back above $0.7032.