We continue to focus on a few of the same pairs/markets as last week; a couple with their themes changing and a couple with their themes gaining traction. This week, the euro showed some pep in its step as it quickly put the wedge/11500 breakdown to the test; is this a sign of a broader reversal? USD/JPY hasn’t been an easy handle, but with it breaking out of a descending wedge, a path higher may smooth things out. USD/CNH continues to be high on the radar as signs of a broader reversal gain traction. Same goes for gold.
Technical Highlights:
- EUR/USD, big bounce or reversal?
- USD/JPY may gain clarity, finally
- USD/CNH high on radar for a move lower
- Gold reversal anticipated to continue for now
To check out our intermediate-term fundamental and technical outlook on major markets and currencies, see the Q3 Trading Forecasts.
EUR/USD, big bounce or reversal?
The turnaround in the euro in recent sessions has quickly put the downtrend in question as the 11500-mark and wedge prior to the breakdown are overtaken. The trend-line from April is currently helping to keep a lid on a further advance, but a break could go a long way towards bolstering the reversal scenario.
EUR/USD Daily Chart (bounce or reversal?)
Check out the Q3 Euro Forecast for a broader fundamental and technical view.
USD/JPY may gain clarity, finally
USD/JPY has been a mystery as of late, but that could finally change. The descending wedge we discussed on Wednesday was broken yesterday, and with it the possibility of seeing higher prices increases. A smallish pullback from around current levels may at some point offer a good entry with a higher low from the earlier week low developing.
USD/JPY Daily Chart (Descending wedge/pullback scenario)
Check out the Q3 Japanese Yen Forecast for a broader fundamental and technical view.
This set-up along with gold sits at the top of the board. The strong weekly reversal last week coupled with the developing head-and-shoulders pattern on the 4-hr time-frame are beginning to make for a solid set-up. The key to this trade gaining momentum is seeing price decline below the neckline. For more details on this set-up, check out the USD/CNH piece from yesterday.
USD/CNH 4-hr Chart (H&S to play out next week?)
Gold reversal anticipated to continue for now
Gold is continuing to try and make a recovery at the least, if not more. Yesterday’s pullback may be all we see before continuing higher, but even if we see a little more weakness first, a higher low is seen as having decent probability of setting up the metal for a move to 1210 or better.
Check out the Q3 Gold Forecast for a broader fundamental and technical view
Gold Daily Chart (Reversal to continue…)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX