Weekly Forex Technical Outlook – 30th September

Sep 30, 11:36 am
Currencies

EURUSD (1.120): EURUSD formed a doji candlestick pattern yesterday indicating the previous session’s bullish engulfing candle was probably losing strength and momentum. Today’s bearish close is likely to confirm the bears coming back into control. EURUSD has also formed a bearish flag pattern which will be confirmed on a breakout from the channel and on the break of the first support at 1.1119. The measured move to the downside on a successful flag pattern indicates a decline to 1.0925 at the minimum which sits just a few pips below the main support level identified between 1.0977 – 1.09444. Price is still trending in the larger rising price channel indicating that the longer term bias is to the upside, but it could change depending on how prices react near 1.0925 region. To the upside, resistance comes at 1.144 region if a daily candle manages to close above the doji high at 1.128.

EURUSD Daily Chart: Bearish Flag
EURUSD Daily Chart: Bearish Flag

GBPUSD (1.518): GBPUSD has posted sharp declines on breakout of the rising price channel on 26th August. The declines saw prices quickly testing support near 1.5215 – 1.5133 which offered a strong bounce sending prices to retest the breakout level. The minor rising price channel plotted off the lows at 1.5178 from 4th September through the highs of 1.559 on 17th September was also broken near the identified support at 1.536 and 1.5344. We expect to see another small rally in GBPUSD identified by the bullish divergence with the Stochastics which could see prices retest the broken support at 1.536/1.5344 to establish resistance. The support zone at 1.5215/1.5133 is likely to come under pressure if prices fail to break above the identified resistance. To the upside, if prices close above 1.536/1.5344, the next level will be close to the main resistance of 1.5779 – 1.5685, while to the downside, a break of the support below 1.5133 will see a sharp decline to 1.50

GBPUSD Daily Chart - Bullish Divergence
GBPUSD Daily Chart – Bullish Divergence

USDJPY (120.3): USDJPY has been trading sideways for nearly most of September. However, the bearish pattern cannot be ignored with prices forming a potential bearish flag/pennant pattern which indicates further downside in store. In the longer term, support is at 118.4. A break below this support could see USDJPY dip lower to 116.576 region. To the upside, there is a strong resistance near 122.145/121.8 region which could keep prices on hold for the time being. Only a close above 122.145 will validate a bullish bias to the upside with an initial level of 120.971 being one to watch for. A daily close above this level and if support is established here could potentially signal further upside in store.

USDJPY Daily Chart - Bearish Flag/Pennant
USDJPY Daily Chart – Bearish Flag/Pennant

USDCAD (1.339): USDCAD continues to tread higher followed by the breakout from the bullish pennant pattern. Prices briefly fell to test the support near 1.309 before managing to break the previous resistance at 1.3336. Plotting the minor trend line previously, a bearish candlestick coincides with the trend line, however with support at 1.3336, USDCAD remains biased to the upside. A break and a potential retest below 1.3336, is required in order to expect any decent correction in USDCAD. To the upside, the bullish pennant indicates further rally which will see a test to 1.3508 followed by the final measured target of 1.3884.

USDCAD Daily Chart - Bullish Pennant continuation
USDCAD Daily Chart – Bullish Pennant continuation

USDCHF (0.973): USDCHF has formed a bearish rising wedge pattern on the H4 chart time frame. However, after prices broke out from the wedge, it is consolidating near the known support of 0.97208. As long as this support holds, USDCHF could potentially test the previous resistance at 0.98 region followed by an eventually rally to 0.99. There is however a broad risk of support failing at 0.9720. In which case, USDCHF could potentially breakout below the support and eventually fallout from the rising price channel. Lower support comes in at 0.955 region.

USDCHF H4 Chart - At the crossroads
USDCHF H4 Chart – At the crossroads
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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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