Countertrend moves appear to be the nature of the FX markets of late, with US dollar weakness giving a brief period of strength to the likes of the euro and Australian dollar.

Pound and dollar
Source: Bloomberg

EUR/USD at wedge top

EUR/USD continues to trade higher this morning, with price now having reached the top boundary of a rising wedge seen this week.

Given the gradual nature of this recent rise, accompanied by the fact that a rising wedge is a bearish pattern, there is a good likeliness we will see price return to the bottom of this formation in the coming hours. Thus this pattern is expected to remain until we see a concrete breakout.

The preference is for a bearish breakout, signaled by a close below $1.0651. This would subsequently look towards $1.0628 and $1.0593. Conversely, resistance levels to watch are at $1.0693 and $1.0708.

GBP/USD downside likely

GBP/USD has seen price rise gradually overnight, within an ascending channel formation. However, with trendline resistance coming into play, price is seemingly breaking back out the bottom of the channel.

Given the bearish trend coming into this brief retracement higher, further downside seemed to be the likely resolution before long. Thus a bearish outlook remains, with a close below $1.5074 acting as a confirmation signal.

A close back above $1.5115 would bring about the possibility of a more extending bounce. Support levels to watch are at $1.5074, $1.5053 and $1.5027. Resistance is at $1.5115 and $1.5156.

EUR/GBP upside continues

This week’s resurgence in EUR/GBP is likely to be a short one, with the contrasting monetary outlook of the European Central Bank and Bank of England likely to dominate the medium-term outlook for traders.

However, we have seen a nice consistence move higher in EUR/GBP this week and who are we to stand in the way of a trend? The inability to regain the £0.7080 level this morning is a warning sign, yet while price remains above £0.7053, this trend is expected to continue.

A close below £0.7053 would be the indication that the wider bear trend in this market is set to regain its grip. Resistance levels are likely at £0.7080, £0.7099 and £0.7110. Support levels to watch are at £0.7053, £0.7046 and £0.7038.

AUD/USD hits resistance

AUD/USD has been seeing a nice trend higher following the bullish channel breakout seen earlier this month. However, we have seen price come into contact with the $0.728 resistance level (18 September peak) and post a spinning top candle.

Given the overbought nature of this market, a move lower seems likely today with support levels of $0.7250, $0.7224 and $0.7200 in view.

Alternately, a close above $0.7280 would bring expectations of further upside, where $0.7297, $0.7363 and $0.7382 are the next major levels. 

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