Forex Trading Library

Weekly Forex Technical Outlook – 6th October

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EURUSD (1.12): EURUSD has been consolidating for the past few sessions on the daily chart with the bear flag pattern still intact. Plotting a down sloping price channel connecting the highs of August 24th and 17th September, we can see that the support level at 1.112 is a strong level that could keep prices higher if not broken by a strong bearish candle. We expect EURUSD to remain range bound over the medium term of a few weeks before any decisive bias can be formed. To the upside, resistance is at 1.144, which was previously tested last month. A break out from the falling price channel will however signal an early price move to the upside. With EURUSD trading within the larger rising price channel, the longer term trend is biased to the upside, unless prices break below 1.0977 – 1.0944 region. For the moment, as long as prices are below 1.1313 level of minor resistance, we expect EURUSD to decline towards 1.1196.

EURUSD Daily Chart: Range bound within the bearish flag
EURUSD Daily Chart: Range bound within the bearish flag

GBPUSD (1.51): GBPUSD is trading in the main support zone of 1.5215 – 1.5111 region with the bearish divergence still in play. The bullish divergence points to a correction to at least 1.53 in the near term. However, the daily candles do not yet show any signs of an upside momentum taking shape. With prices trading in the support zone, a break below 1.5111 could see GBPUSD risk declining to 1.4992 or towards 1.50 which marks an important support level of interest. Price action however formed a doji candlestick pattern three days ago which was followed up by a bullish candlestick pattern. So, if prices stay above the doji’s lows of 1.5107, GBPUSD could potentially set the stage for a move to the upside in order to correct the downtrend.

GBPUSD: Bullish Divergence points to 1.53 correction
GBPUSD: Bullish Divergence points to 1.53 correction

USDJPY (120.3): USDJPY remains range bound within 121.41 and 118.995 levels of support/resistance. Prices have remained sideways in the large triangle pattern indicating a possibility of a break out in the near term. To the upside, a close above 120.971 through 121 is needed to set the bias to the upside, while a break below 118.4 will confirm a move to 116.575 which marks a strong level of support. Prices have closed bullish after the long doji candlestick formed off last Friday, 2nd September indicating the potential move to the upside. However, with the triangle pattern coming off a strong bearish move, the risks of an upside breakout could be limited unless we see evidence of a strong support being established near 121 region.

USDJPY: Triangle consolidation still in play
USDJPY: Triangle consolidation still in play

USDCAD (1.30): USDCAD broke down the 1.3336 support and has resulted in a sharp decline since then. Prices are currently near 1.3095 level of support and we could expect to see a potential retracement to this decline. Support levels at 1.32133 and 1.3336 make for ideal levels for price to establish resistance. To the downside, the next main support comes in at 1.2977 or rounded off to 1.30 psychological level. Any retracements to the upside could see the sellers come into the market as the weekly chart closed in a bearish engulfing pattern last week pointing to further downside weakness in USDCAD in the near term. A close below 1.30 could see a dip to as much as 1.28 level of support.

USDCAD: Test to 1.30 support
USDCAD: Test to 1.30 support

USDCHF (0.97): USDCHF has been ranging off the 0.972 level with the most recent rally failing to make a higher close. A decline back to 0.972 is likely but a break below this level will mark a steeper decline to the next short term support at 0.96668. This would also mark a break out from the rising price channel in which instance, a retest back to 0.972 could be tested for resistance followed by a potential decline to 0.955 on a break below 0.96668, which also shows confluence of the break out from the rising wedge pattern as noted previously. To the upside, a close above 0 .9766 is needed in order for prices to push higher to test the next big resistance at 0.98

USDCHF: Rising wedge pattern
USDCHF: Rising wedge pattern
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