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The Dollar is positioned for more selling in the week ahead as big-picture tailwinds are favoring the downside. The Euro is consolidating nicely so far after breaking out of a large falling wedge pattern. Cable is doing its best to bottom on a long-term trend-line, clean pattern could soon come into view. GBPJPY is working on building a bearish continuation pattern.

Technical Highlights:

  • EURUSD price action encouraging after wedge-break
  • GBPUSD in process of carving out a bottoming pattern
  • GBPJPY could form another bearish continuation pattern

See where our team of analysts see your favorite markets and currencies headed in the in the DailyFX Trading Forecasts.

EURUSD price action encouraging after wedge-break

The Euro recently closed the week outside of a falling wedge formation that has been under construction since August, and on that the path of least resistance is tilted higher. Furthermore, recent price action has changed from months past, in that instead of melting back lower following a strong rally, we are seeing EURUSD consolidate gains. This change in behavior could be a key sign that buyers have gained control. Solid support clocks in right around 11345 (price/200-day MA).

EURUSD Daily Chart (consolidating)

EURUSD, GBPUSD, GBPJPY – Charts for Next Week

EURUSD Weekly Chart (broke falling wedge)

EURUSD, GBPUSD, GBPJPY – Charts for Next Week

GBPUSD in process of carving out a bottoming pattern

Cable’s pop off the October 2016 trend-line is thus far holding and with the recent decline it is in the process of carving out an inverse head-and-shoulders (H&S) pattern. It still needs to find the right shoulder low, but with the head falling at long-term support, if it does fully form the pattern has a good chance of leading to a nice rally towards 12900 to begin with, likely even higher with the Dollar looking vulnerable.

GBPUSD Daily Chart (possible inverse H&S pattern)

EURUSD, GBPUSD, GBPJPY – Charts for Next Week

GBPJPY could form another bearish continuation pattern

GBPJPY had a nice bear-flag unfold during the middle of the month, which led to the recent low. The recent choppy price action could lead to another continuation pattern. It still needs time, but another bear-flag is in the works. The lower parallel needs to be broken for it to be valid, so keep that in mind should it fail to do so and rally from here. Patterns are not validated unless they have certain events unfold.

GBPJPY 4-hr Chart (Bear-flag forming)

EURUSD, GBPUSD, GBPJPY – Charts for Next Week

Resources for Forex & CFD Traders

Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX