Hello Forex Traders!
The EURUSD and GBPUSD are inching their way forward to major weekly resistance levels. The clash of short-term trends will again face off with long-term support and resistance. Only time will tell which side will prevail. With the U.S. budget negotiations and potential release around the corner, hang on for an interesting ride.
What we do know is this:
- EURUSD resistance is at 1.37
- GBPUSD resistance is at 1.63-1.6350
- Market structure: the likelihood of rising or falling wedges in these environments is high.
The reason for the latter/last point is simple: buyers buy at bottom and certainly do not want to long the market right in front of major weekly resistance. This up and down pattern eventually can start to look very corrective. This is definitely a scenario that could unfold on the EU and GU.
With regard to the EURUSD, a break above 1.3620 top could mean the definite break of the 886 resistance Fib at 1.36 and a potential up move could prove to be a good trade. There is strong 4 hour divergence present as well, so just be careful when approaching 1.3670-1.371 Price area.
Let us also take a look at the USDCHF for guidance. The USDCHF currency pair is currently at a weekly bottom and the psychological 0.900 level. However, price is falling hard and fast so there is momentum. Here too the aged old question: break due to the trend or bounce to the Support and Resistance?
A break of that support level would be a bit surprising because it could encounter issues with the Swiss National Bank as well, which might not like the fact that their currency is again strengthening beyond their dreams. I’m keeping a close on eye whether the support can create an uptrend on a lower time frame in order for me to trade a bounce up.
The GBPCHF 4 hour chart is, not surprisingly, a major contrast with the USDCHF. That is obviously caused by the uptrend on the Cable (GBPUSD). Technically speaking the GBPCHF is surely in an uptrend with 2 channels in play (purple and blue).
The break of the opportunity trend line (green) would indicate a potential with the trend break out. The break out would also be a break out of the smaller uptrend channel (purple), which indicates more momentum with the channel.
Up and down? The break of the green trend line and top purple trend line is a good break out trade to watch for. The break of the purple channel to the downside is not appealing to me due to the bigger trend (blue channel).
Last three things to mention:
Thanks for reading and for sharing this article. Tomorrow we will continue with our series of educational articles after finishing the trend (part 1), trend (part 2), versus reversal versus range series. Take a look at those via the hyper links.
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