The EURUSD drop from Tuesday’s high is in 5 waves and price has retraced 38.2% of the decline so weakness could resume now. If that fails to materialize, then the 61.8% is proposed resistance at 1.1903.
8/19 – The previously described triangle scenario didn’t pan out. Rather, EURUSD finished off its ‘5th of 5th’ wave quickly. Fine, just get it over with. Near term, I’m paying attention to the parallels within the channel from the 5/14 low for a precise short entry. The high was on the 75 line within the channel so the most likely spot for the next reaction is the 25 line (concept of symmetry) near 1.1750. This line is important as well because it was resistance throughout July. If price bounces from there then the underside of the median line is proposed resistance. The biggest test for bulls is the lower parallel near 1.1650.
Cable ripped higher from the median line. I was looking for that to provide temporary support and for resistance to come in near 1.3170/85. The former happened…the latter didn’t and I’m questioning whether or not yesterday’s reversal was meaningful or just ‘a dip’. If I solely consider median line analysis, then GBPUSD is a raging bull. The median line was perfect resistance and has been perfect support. The next upside level is the 75 line at 1.3700-1.3800 (red parallel). Proposed support is 1.3139 (volume level).
8/19 – The triangle scenario in GBPUSD didn’t pan out either. Instead, GBPUSD carved a bearish outside day off of the year open price at 1.3250. A J-Spike also triggered (magenta bars…a key reversal with a volatility filter). The median line is a near term reaction level near 1.3060. Proposed resistance is 1.3170/85 (prior highs). Generally speaking, I’m looking towards the 200 day average and line off of the March and June lows near 1.2750.
GBPJPY held 138.50 (low today was 138.57) so upside is favored against today’s low. Again, median line acceleration is in focus since the next test will be the 3rd test this month. 141 is big anyway since it was support from December to February. Broader upside focus remains 145-146 and 139.20 is now proposed support.
8/17 – This GBPJPY fork is a thing of beauty. The 25 line has been precise resistance and support and the median line has been precise resistance. Pay attention to the 25 line near 138.50 for support. I love this idea given the reward/risk profile (next big upside is 145-146). If 138.50 can hold, then upside acceleration is in play on the next median line test (will be the 3rd test).
EURGBP is trying to breakdown…again. This drop is worth going with though given the slow developing nearly 3 month head and shoulders top. Downside potential is significant. 2 equal legs down from the March high would be .8347, which is also range lows since 2016 (see daily chart below). Resistance is .9000.
8/4 – It’s been over a month since what I’m viewing as a lower high within a bearish cycle from the March high in EURGBP. The battle lines are drawn for breakdown. .9000 (or so) is clearly important. I’m willing to go with a break below that level.
The move above 1.0880 materialized. Watch that now for support to get long. The line off of the 2015 and 2017 highs is possible resistance near 1.1125. Again, the big double bottom breakout level is 1.1300.
8/4 – Everything since the 2015 low in AUDUSD may be a massive double bottom. Above the June high at 1.0880 would be an early breakout warning. The ‘real’ breakout level is 1.1300. I laid out reasoning for near term downside in both AUDUSD and NZDUSD over the last few days but a broad bottoming out in AUDNZD (still just a possibility) suggests that Kiwi short is the better option.