The Euro struck a familiar set of lows on Thursday’s ECB meeting, posting a candlestick that suggests another worthy inflection point is in play. AUDUSD is breaking down from a wedge within the context of a downtrend, suggests lower prices ahead. A few of the pairs in the ‘Yen-plex’ look attractive, but GBPJPY (&AUDJPY) stand out given technical posturing. Gold is thoroughly testing a recent wedge breakout; a hold keeps the upside intact while a failure could lead to a quick drop back towards major support levels.
Technical Highlights:
- EURUSD long-legged Doji formed at support
- AUDUSD corrective wedge breaking, looking lower
- GBPJPY & AUDJPY have attractive bearish set-ups
- Gold price action around wedge to determine near-term
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EURUSD long-legged Doji formed at support
The Euro reacted with some modest volatility to yesterday’s ECB meeting, which resulted in a daily Long-legged Doji candlestick. The push/pull came at support from April and May just above the 11100-threshold, which could result in a bounce if the 11130 low can hold. Given the general tone this may only turn out to be a countertrend bounce for now.
EURUSD Daily Chart (Long-legged Doji at support)
AUDUSD corrective wedge breaking, looking lower
AUDUSD is in the process of breaking a rising wedge formation within the context of a downtrend. This should get Aussie rolling back towards the June lows or worse. Waiting for a bounce/consolidation following the break may offer the best risk/reward set-up at this juncture. Keep an eye on support at 6910.
AUDUSD Daily Chart (corrective wedge breaking)
GBPJPY & AUDJPY have attractive bearish set-ups
GBPJPY is in the process of building yet another bear-flag, best seen on the 4-hr time-frame. So far, the top of the pattern is at a pair of recent lows. The pattern still needs to fully mature and trigger by breaking the underside trend-line, but has good potential given the overall downtrend.
GBPJPY 4-hr Chart (Another bear-flag forming)
AUDJPY wedged up nicely heading into this week. The break the other day has focus shifted lower. A drop through 7513 should put pressure on the pair towards the June lows surrounding 7400.
AUDJPY 4-hr Chart (wedge broke)
Gold price action around wedge to determine near-term
Gold price is at a make-or-break point in the near-term, with the recent wedge breakout under threat of reversing. A hold and gold will stay constructive, while a break of the bottom-side trend-line of the wedge could spur a quick shot lower as longs are caught on the wrong-side.
Gold Price 4-hr Chart (wedge hold or fold?)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
