GBPUSD hasn’t quite reached 1.4000 (high today was 1.3982) but the upper parallel was reached. I am on reversal watch in Cable right now…especially given bearish seasonal tendencies over the next few weeks (see below).
Focus remains higher for EURUSD following today’s hold. In fact, price pulled back to noted support and immediately turned higher. FOMC is tomorrow. The only reason I mention that is because of the potential for increased volatility. Even if you told me what Powell would say tomorrow, it wouldn’t matter. Only the reaction matters! Bottom line, price has held support (for now at least) so I’m looking higher towards the well-defined 1.1950/90 zone.
EURUSD has been churning near lows for weeks, putting in divergence with RSI on both the daily and 4 hour time frames. The break above the line from the 6/25 high warrants a long position. Watch for 1.1780 support. General focus is the center line and 25 line within the channel from the February high near 1.1930 and 1.2070 (also the 61.8% retrace).
DXY and USDOLLAR remain in flux (one more push higher as per the 4th wave interpretation?…see yesterday’s post) but EURUSD action from the low is constructive. Price rallied in 5 waves and declined in 3 waves therefore I lean towards the long side against 1.1772. Also, don’t forget that Euro futures are holding VWAP from the March low (see below).
Short term waves suggest that crude has put in a lower high. Specifically, a 3 wave rally followed a 5 wave decline from a high. The implication is that another impulsive decline is underway. The March high at 68 is an initial level of interest on the downside. For context, the longer term chart is reproduced below.
Kiwi continues to play out beautifully. .7000 has provided resistance the last 3 days and focus remains on .6750-.6800. RBNZ is tonight (Wednesday in New Zealand) so it’s possible that we get a flush into .6800 or so before a rebound. For us, this sets up a possible opportunity to flip from short to long.
EURUSD held VWAP from the 2020 low (again) so near term focus is higher towards the center line of the channel from the January high, which is about 1.1935. Importantly, notice that the 75 line provided support therefore the 25 line is proposed resistance if reached (as per median line symmetry). The 25 line intersects the 61.8% retrace of the decline from the May high at 1.2081. Watch for support near 1.1825.
FOMC minutes were today and the ECB version is tomorrow. Price is just pips from the noted 1.1770 level (remember that’s a possible bounce level). Price is currently at VWAP from the 2020 low, which was support for the March low. Bottom line, EURUSD is into a zone that could lead to a strong bounce. If reversal evidence arises, then I’ll let you know and look to take action.
EURUSD is in the exact opposite position as DXY. That is, the line that extends off of the September and March lows intersects the median line from the fork that originates at the January high. That intersection is about 1.1770. A break below there would be extremely bearish. The red parallel (25 line) is now resistance. That line is currently about 1.1950 about 6 pips per day.