Countertrend rallies have dominated price action this morning. However, does this provide us with better opportunities to jump onto the trend once more?
EUR/USD expected to weaken once moreEUR/USD is rallying after a fall through trendline support yesterday, providing us with even more confidence of a significant move lower for the pair. The medium-term downtrend coincides with the short-term bearish view, with price having dropped out of a symmetrical triangle formation off the back of a head and shoulders break.
With that in mind, this current rally looks like an opportunity to get short at a more advantageous price, where a bearish short-term view remains unless we see an hourly close back above $1.1261. Given the break below the $1.1216 support level, it makes sense that we are seeing the pair round off and thus another move lower seems highly likely here.
GBP/USD rallying into significant resistance levelGBP/USD has seen a sharp rally this morning, in a bid to recover some of the ground lost off the back of yesterday’s weak CPI reading. However, this looks likely to be just a retracement and with price coming into a crucial resistance zone, we could see this rally challenged soon enough.
The cluster of two trendlines and the 100-period simple moving average is also key because it marks the neckline of a head and shoulders formation. With that in mind, coupled with the completion of the head and shoulders pattern, a bearish outlook is in play.
Be careful though, as the impending jobs data and tomorrow’s Bank of England announcement mean volatility is around the corner.
USD/JPY rallies into trendline resistanceUSD/JPY has rallied up through a resistance level of ¥103.06, bringing price back into an absolutely critical resistance trendline. This trendline has held for seven months now and it would be pretty momentous should we see it broken.
As ever, the most important thing would be the ability to break the next swing high, which means that even if price passes through this trendline, it would have to break above ¥104.32 to provide a bullish medium-term outlook.
However, for now it looks like an interesting area to get short once more, with price rallying into a deep retracement (70%) and set within a clearly defined downtrend. Certainly the double bottom we have just seen created is a worry, yet the bias remains to the downside for the time being.
