EURUSD (1.106) managed to find support at 1.105 – 1.10285 support level in the immediate aftermath of the Brexit referendum vote. The support level is seen to be strong for the moment and a bullish follow through here could confirm a near-term reversal. While the head and shoulders pattern remains in play, the retracement is seen extending the correction towards 1.123 – 1.1214 level which previously acted as support before giving way. A correction to this broken support for establishing resistance could see EURUSD post a decent recovery. As long as prices stall near this resistance level, we can expect a new leg of declines and to the downside, the current support at 1.105 – 1.1028 will be key. A breakout below this support could see EURUSD fall towards 1.081 – 1.0750 lower support.
USDJPY is attempting to trim its losses as well, but the further bias is established only on a break above Monday’s high of 102.481. In such an event, USDJPY could extend its recovery to as much as 105.62 – 106.20 resistance level. A breakout above this resistance could see USDJPY extend its gains targeting 111 – 111.88 major resistance. To the downside, 101.543 is the key price level to watch for. A bearish reversal here could signal further downside with a potential to move towards the 98.5 – 99.0 support level.
GBPUSD (1.328) has interestingly completed its measured move following the breakout below 1.405 – 1.40 support level in a somewhat broadening descending triangle pattern. The retracement, if prices can hold above 1.322 – 1.312 could signal a near-term correction. The immediate price level of interest to the upside is Friday’s close at 1.36770 and could see the sterling extend gains towards 1.40 being optimistic. To the downside, a break below 1.322 – 1.3122 support could see renewed declines targeting 1.305 and 1.30 lower support levels.
USDCAD (1.30) rallied to 1.313 – 1.308 resistance but the price action currently is showing a bearish reversal. A weak close today could signal further downside, which could keep price moving sideways below the resistance and above 1.26 support. A breakout below 1.26 could, however, signal further downside for a move towards 1.250. There is also a risk of the double top pattern that has formed near 1.3136 – 1.3080 and in this context, a break of the lower support could see the declines extend strongly.
USDCHF (0.977) is in the process of forming a head and shoulders pattern with the neckline support seen at 0.954. The left shoulder was formed near resistance at 0.9774 while the right shoulder is currently trading near this resistance level. A bearish follow through here could see prices extend its declines back to the neckline support at 0.954 with a validation of the head and shoulders following the breakout below the neckline support indicating a longer-term decline to 0.930.
