EURUSD (1.07): EURUSD’s sharp declines from last week have put the bearish sentiment back into the picture. With prices breaking below the lower support at 1.10 – 1.097 and continuing to fall, EURUSD could now possibly test the previous lows at 1.056 through 1.04615 in the medium term. However, the declines are likely to come off later, as the potential bullish divergence to the Stochastics is pointing to a near term correction back to the broken support level at 1.10 – 1.0977 region to establish resistance. If prices are capped at this resistance, EURUSD could see a continued decline targeting 1.08 and down to 1.0564. There is also a small chance that the correction, depending on momentum could see a correction a bit higher towards 1.112 through 1.11 region as well.
GBPUSD (1.51): GBPUSD’s failure to break higher from the descending triangle has led to prices breaking below the major support at 1.5215 – 1.517 region. A retest back to this broken support is likely to establish resistance with the scope of a further upside to 1.536 – 1.529 region to mark the completion of the divergence correction. With price trading close to the support/resistance level it is unlikely to expect any near term bias with only a conclusive close below 1.517 marking a further decline lower. To the downside, support at 1.4992 is the most probable target if the upside is limited.
USDJPY (123.2): USDJPY broke out strong from the falling price channel but with the divergence showing up on the Stochastics oscillator a retest to 121.47 through 120.97 is very probable. This would also mark a retest to the break out level. The bias still remains uncertain at this point despite the top being formed near the 125 region. Yesterday’s daily price closed with a spinning top, indicating a decline to the downside in the near term.
USDCAD (1.32): USDCAD has been trading sideways after forming a top near 1.34. Prices are trading back to the short term support/resistance level at 1.3336 region. A break higher could signal a move above the previous top. However, yesterday’s daily candle closed with a near hanging man pattern which could signal a potential move to the downside. The Stochastics divergence shows a possible longer term correction to 1.252 region but this will need to be confirmed only by a close below 1.311 followed by a break of the minor rising trend line.
USDCHF (1.004): USDCHF’s strong rally has seen a brief test to 1.007 before prices eased back lower. There is a pending retest to the break out resistance at 0.9888 which is likely to be tested on a correction to establish support with the support zone coming in from 0.9888 through 0.9792 regions. Alternatively, in the event of a break out above 1.008, USDCHF could expect further bullish momentum see prices post new highs. But any rallies are likely to be short lived unless support is established at 0.9888 region.
