Trend Lines Offer Decision Spots in FX Market

09/03/2015 9:00 am EST

Focus: FOREX

The staff at Admiral Markets uses technical analysis to examine the price action of three major currency pairs and points out the levels at which a break above resistance or below support could trigger more momentum.

Currency Pair EUR/USD

The EUR/USD has bounced at the support trend line (green) but the rebound has been relatively slow, which has created a triangle. A break above resistance (red) or below support (green) could trigger more momentum.

chart
Click to Enlarge

The EUR/USD completed an ABC rally (purple) after breaking above resistance (orange). After that it made a deep pullback which probably belongs to a bigger bullish correction like a wave X retracement (purple).

chart
Click to Enlarge

Currency Pair GBP/USD

The GBP/USD price action is captured by a neat downtrend channel but it has reached the 61.8% Fibonacci target of wave 5 (orange). A break above resistance (orange) or below support (green) could trigger more momentum.

chart
Click to Enlarge

Divergence is still present with the recent break of the bottom (purple).

chart
Click to Enlarge

Currency Pair USD/JPY

The USD/JPY had a strong bullish rebound which increases the chance of wave 5 (dark red) failing to break the bottom, especially when one considers the big wick on the bottom of the last week's weekly candle.

chart
Click to Enlarge

A break of the resistance (orange) indicates that a wave (blue) is invalidated. The alternative is a corrective wave pattern or a truncated wave 5 (failure to break the bottom).

chart
Click to Enlarge

By the staff of Admiral Markets

Related Articles on FOREX

Keyword Image
The Fabulous Shrinking Renminbi
09/27/2017 1:13 pm EST

As of August 2015, renminbi (RMB) in payments globally accounted for 2.8 percent of the total, the f...