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EURUSD reaches 8-week low; more losses are expected

EURUSD has been underperforming in the past two days, breaking the almost four-month old ascending trend line to the downside. The price reached an eight-week low around 1.1019, distancing itself from the Ichimoku cloud and the short-term moving averages in the daily timeframe.

Momentum indicators are pointing to a negative bias in the short term as the RSI is hovering above its 30 oversold mark but below 50 and the stochastic oscillator is flattening in the bearish territory, both confirming the recent downward movement in the price.  Also, the MACD is strengthening its momentum to the downside below the trigger and zero lines.

Further losses should see the 61.8% Fibonacci retracement level of the upleg from 1.0880 to 1.1240 near 1.1015. A significant drop below this area could open the door for the 1.0990 support, taken from the lows on November 27, while lower the price could hit the 1.0940 region, shifting the medium-term outlook from neutral to bearish.

In the event of an upside reversal, the 1.1040 resistance and the 50.0% Fibo near 1.1060 could attract buyers’ attention. A break above the latter could challenge of the 38.2% Fibo of 1.1100 and the 40- and 20-SMAs currently at 1.1110 and 1.1120 respectively.

Overall, EURUSD seems ready for a downside run following the penetration of the rising trend line. 

 

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GBPUSD faces symmetrical triangle; broader trend is bullish

GBPUSD is lacking direction over the last five weeks, creating a symmetrical triangle in the short-term after reversing from the 14-month high of 1.3515. When looking at the bigger picture, the pair has a clear bullish trend since September 2019 but technical indicators are confirming the recent neutral mode. The RSI is declining slightly below the 50 neutral level, while the MACD oscillator is failing to strengthen its momentum near the zero line.

Currently, the price is hovering below the 20- and 40-simple moving averages (SMAs) and is heading towards the lower boundary of the triangle around the 1.3000 handle. Below that, a penetration of the triangle and the ascending trendline could also encounter some pressure at the 1.2960 support, before flirting with the 1.2920 obstacle, which is the 38.2% Fibonacci retracement of the up leg from 1.1957 to 1.3515, as well as the 1.2900 round number beneath. Clearing these key levels would see additional losses until the 1.2820 barrier, taken from the lows on November 22.

If the price remains above the rising trendline, then the focus would shift to the upside until the 23.6% Fibo of 1.3145, while if breached would increase upside pressure and drive the pair above the symmetrical pattern at towards 1.3210 and 1.3285.

Overall, GBPUSD would endorse its upside movement only if there is a daily close above the 1.3210 resistance barrier.

 

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USDJPY falls below 109.00; approaches uptrend line

USDJPY is holding losses below 109.00, dropping from the seven-month high of 110.28 and below the 20- and 40-day simple moving averages (SMAs). Also, the pair entered the Ichimoku cloud and is trying to slip beneath the 23.6% Fibonacci retracement level of the up leg from 104.45 to 110.28.

Technically, the price could lose more ground in the short-term as the RSI is changing direction to the downside and towards its 30 mark, while the MACD oscillator keeps weaking below the trigger line and has neared the zero line. However, the stochastics are warning – as are above the oversold zone – of a possible upside correction with the completed bullish crossover between the %K and %D lines.

A decline under the lower surface of the Ichimoku cloud could meet a strong barrier at the 38.2% Fibo of 108.05. A more powerful bearish penetration could open the way for the 107.65 level and the 50.0% Fibo of 107.35.

In the positive scenario, a rebound on the lower surface of the Ichimoku cloud (108.80), may keep the pair on the uptrend started from the 104.45 low in the end of August. Continuing north, resistance could be encountered at the seven-month high of 110.28. Higher, the price could flirt with the 110.65 and the 111.00 critical levels, identified by the tops on May 2019

In brief, USDJPY could lose further steam in the short term, while in the medium-term the pair continues to hold a positive outlook as it remains above the rising trend line. 

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EURUSD may retest 1.1100 after rebound on 2-month low

EURUSD found some footing around the 1.0990 support level last week and returned back above the red Tenkan-sen line and the 50.0% Fibonacci retracement level of the upleg from 1.0880 to 1.1240 near 1.1060. Also, it touched a fresh one-week high near 1.1095 on Friday, signaling a possible upside correction of the pullback from 1.1240 in the short-term.

The price is currently testing the 20-day simple moving average (SMA) and a former restrictive area – the Ichimoku cloud – where any decisive close higher may prove valuable to the market. The MACD oscillator surpassed its trigger line and is moving towards the zero line, gaining some ground, while the stochastic is reaching the overbought zone.

A continuation of the upward move may meet immediate resistance around the 38.2% Fibo of 1.1100, while slightly higher the bulls could try to overcome the 40-day SMA at 1.1107 and the 1.1120 barrier. Should the price overcome these levels, the 23.6% Fibo of 1.1155 and 1.1170 could come in focus.

In the negative scenario, the pair could challenge the 50.0% Fibo of 1.1060 again, while even lower the 61.8% Fibo is standing near 1.1015. The two-month low of 1.0990 could be the next level to watch before tumbling towards the 1.0940 hurdle, identified by the low on August 2019.

In brief, EURUSD is expected to pause the south-run in the short-term, while in the medium-term, buying interest could advance if the market confirms a surge towards the six-month peak of 1.1240.

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GBPAUD to keep bearish mood in short-term

GBPAUD turned overbought near a fresh 3 ½-year high of 1.9750 last week, with the price drifting south along with the RSI and the MACD, which signal a bearish bias for the short-term in the four-hour chart.

 

The price itself is providing negative signals too as it is currently trying to close below the 50-period simple moving average (SMA) and the 38.2% Fibonacci of the 1.8550-1.9750 upleg after breaching the supportive 20-period SMA.

 

Should the sell-off continue, the 50% Fibonacci of 1.9200 should be the next level to watch given the area’s supportive reaction last week. Falling below the former 1.9150 mark, the door would open for the 1.9100-1.9037 region which includes the 61.8% Fibonacci and the 200-period SMA.

Alternatively, a rebound above the 50-period SMA and the 38.2% Fibonacci of 1.9330 could encourage more buying probably towards 1.9440. Higher, the price may need to surpass the 20-period SMA and the 1.9521 barrier to extend the rally until the next key obstacle seen around 1.9626. Above the latter, all eyes will shift to the 3 ½-year high of 1.9750.

 

Meanwhile in the broader picture, the positive outlook has changed to neutral after the drop below the previous high of 1.9521. However, confidence in the market’s six-month old uptrend remains in place as long as the ascending trendline since July 30 keeps holding.

 

In brief, the short-term outlook for GBPAUD is bearish, while in the bigger picture, although the view has turned neutral, the upward pattern has not lost its long-term attractiveness yet thanks to the ascending trendline.

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EURJPY bounces back above 200-day SMA but bulls look weak

EURJPY regained positive momentum within the 120.00 territory on Tuesday after failing to breach support around 119.76. The pair jumped back above the 200-day simple moving average (SMA) but could not enter the Ichimoku cloud from below nor rise above the broken ascending trendline.

Currently the momentum indicatorsprovide little hope for a meaningful rallyin the short-termas the RSI seems to be losing steam just below its 50 neutral level, while the Stochastics are not far below overbought levels, suggesting that any upside could be limited.

In themedium-term, however, the recent bullish cross between the 50- and the 200-day SMAs keeps optimism for an uptrending market alive.

A rise above the cloud and the former supportive trendline currently both around121.50could push resistance into the 122.86-123.30 zone where the bullish action was restricted the past few months. The 38.2% Fibonacci of the long bearish wave from 133.12 to 115.85 also lies within these boundaries, adding extra importance to the region. Surpassing that zone, the bulls may retest how strong the long descending tentative trendline from the 2018 top of 137.49 is. If this proves easy to get through, the next stop could be somewhere between the 50% Fibonacci of 124.50 and the 125.00 round-level, while higher a tougher barrier could be the area around 126.80 and the 61.8% Fibonacci.

Should the current weakness persist, the focus will shift back to the119.76mark which coincides with the 23.6% Fibonacci, while beneath that the bears could challenge the 118.57 trough taken from January 2019 before meeting support around 117.00

In brief, EURJPY looks neutral in the short-term and positive in the medium-term. 

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GBPNZD maintains neutral-to-bullish bias above cloud

GBPNZD has been consolidating over the last four months with upper boundary the 2.0430 resistance and lower boundary the 50.0% Fibonacci retracement level of the up leg 1.8280 – 2.0550, near 1.9410. However, the broader picture remains positive as the price is hovering above the seven-month ascending trend line.

Turning the attention to the technical indicators, the RSI is sloping up after the bounce off the 50 level, while the stochastic is turning slightly higher before it hit the 20 level. Currently, the price is flirting with the red Tenkan sen line, distancing itself from the 23.6% Fibo of 2.0017.

 

Traders, however, would be more eager to engage in buying activities towards the 2.0430 resistance. If this is successfully breached, then the rally may next rest somewhere near the 2.0550 barrier.

 

Alternatively, a downside reversal below the 23.6% Fibo of 2.0017, then, the Ichimoku cloud and the 20- and 40-day simple moving averages (SMAs) at 1.9900 and 1.9815 could be the next levels to watch.  A steeper decline beneath the uptrend line could also reach the 38.2% Fibo od 1.9685, remaining within the neutral zone.

 

Briefly, traders’ may be on hold until the price continues the positive momentum in the longer timeframe. A bullish action would come after a jump above 2.0430.

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EURUSD drops to a 4-month low; enters oversold area

EURUSD met strong resistance near the broken ascending trendline at the end of January and changed direction to the downside, violating its uptrend off 1.0878 and diving to a four-month low of 1.0940 early on Monday.

 

From a technical perspective, the short-term bias remains negative since all indicators are still located in the bearish area. Yet, the odds for an upside correction are increasing as the RSI and the Stochastics approach oversold levels.

Should an upside reversal happen, the bulls would try to close above 1.1000, which is marginally below the 23.6% Fibonacci of the downleg from 1.1447 to 1.0878. A successful breach of that level could add more legs to the rally, sending the price towards a tougher obstacle around 1.1094, where the 50-day simple moving average (SMA), the 38.2% Fibonacci and the ascending trendline all coincide. Running higher and more importantly above the 200-day SMA, buyers could gain extra confidence, with the spotlight turning next to the 50% Fibonacci and the 1.1175 area.

 

In case selling pressure extends below 1.0920, the nearest key support to watch is the 2019 trough of 1.0878. Clearing that floor, the bears could retest the 1.0815 former restrictive area ahead of the 1.0720 barrier taken from the lows of the 2015-2016 period.

 

In the medium-term window, the outlook remains neutral and only a rise above 1.1175 would cause a switch to positive sentiment.

 

Summarizing, EURUSD is viewed as bearish in the short-term with a potential for an upside correction rising. In the medium-term, the pair maintains a neutral outlook as long as it holds below 1.1175 and above 1.0878. 

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USDJPY looks fragile near recent peaks

USDJPY attempted to reach January’s 8-month high of 110.28 on Wednesday but efforts proved fruitless as the price pulled back into the 109.00 territory early on Thursday.

 

The falling RSI, which failed to resume upward direction on Wednesday, suggests that momentum in the price may remain weak in the short-term. Yet, as long as the indicator continues to move above its 50 neutral mark, upside corrections cannot be ruled out.

Currently, the 109.70 barrier is restricting the move down for the third consecutive day. Should it fall apart, the sellers may need to drive below the 50-day simple moving average (SMA), which is slightly below the 61.8% Fibonacci of the 112.39-104.44 dowleg, to extend the downfall towards the ascending trendline.  A closing price below the trendline and the Ichimoku cloud, and more importantly beneath the 50% Fibonacci of 108.40 and the 200-day SMA, could trigger a new sell-off towards the 107.80-107.48 support area, where any break lower would confirm the start of a downtrend and a bearish outlook in the medium-term picture.

 

In case of a rebound, the bulls would push harder to clear the 110.00-110.28 resistance zone and head towards 110.70. Higher, the 111.40 mark has been a tough obstacle to upside and downside movements in the past and therefore should be watched if the rally picks up more steam.

 

In brief, USDJJPY is expected to be congested in the short-term unless the price falls below its shorter-term SMAs or rallies above 110.28. In the medium-term picture, a negative outlook would come into play below 107.48.

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USDCAD could lose more below 1.3235

USDCAD is set to close negative after five consecutive green weeks. Particularly, the bulls gave up the rally near the previous peak of 1.3326 on Monday despite piercing it and pulled back into the 1.3200 territory.

Expectations are for the cautious sentiment to stay in play in the short-term as the RSI is weakening towards its 50 neutral mark and the MACD is slowing below its red signal line.

Yet, whether the price will extend its sell-off or consolidate will likely depend on the 23.6% Fibonacci of 1.3235 of the upleg from 1.2950 to 1.3228 which managed to prevent steeper declines earlier this week. Failure to hold above that number and importantly a close below the 200-day simple moving average (SMA) could see a retest of the 1.3150 support number, which is just above the 50% Fibonacci and the 50-day SMA, if the 38.2% Fibonacci of 1.3185 proves easy to break.  Further down, the 61.8% Fibonacci near 1.3100 could be another level to watch.

 

Should the price bounce on the 1.3235 barrier, traders could look for resistance within the 1.3300-1.3345 zone. Running higher, it would be interesting to see whether the tentative descending trendline drawn from December 2018 is strong enough to stop the rally and keep the medium-term picture neutral. If not, the 1.3430 mark could next come into view.

 

Attention will be also on the 20-day SMA which is pushing efforts to reach the 200-day SMA – a bullish cross between the lines could be encouraging for the market trend.

 

Summarizing, USDCAD is likely to further ease momentum if nearby support around 1.3233 falls apart. In the medium-term picture, the outlook is expected to hold neutral unless the price runs above the descending trendline.  

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USDCHF shows improvement in Ichimoku cloud; stands near 2-month high

 
USDCHF finally climbed above the strong support of 0.9760 that had been capping upside moves since late December and questions are rising now about whether the market can sustain the break in the coming sessions.  

The positive cross in the 20- and 40-day simple moving averages (SMAs) drove the market within the Ichimoku cloud, while the MACD oscillator is painting a rosy picture for the short-term timeframe as it runs comfortably above the trigger line. Also, the RSI indicator is still holding in the bullish territory.

 

Traders would be more eager to engage in buying activities if the price manages to surpass the nearby resistance at 0.9850, where the 23.6% Fibonacci retracement level of the 1.0235 – 0.9610 downleg is placed. If this is successfully breached, then the rally may next rest somewhere near the 50.0% Fibo of 0.9925 before touching the critical level of 61.8% Fibo of 1.0000.

 

On the flip side, the selling pressure could accelerate again if the market deteriorates below the 0.9760 former strong support area. Such a move could next bring the 0.9625 key barrier under the spotlight, which if violated could trigger sharper losses probably towards the 16-month trough of 0.9610.

 

Summarizing, USDCHF is expected to show improvement if the price overcomes the 0.9850 resistance zone after the rebound on the 0.9610 barrier on January 16.

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UK 100 index slumps below long-term supportive trendline

 

The UK 100 stock index slumped below the supportive trendline that has been holding since the end of 2018, increasing concerns that the market may be changing direction to south.

The downside reversal in the RSI, which is currently heading towards its 30 oversold mark, is a negative signal that the bearish action may get new legs in the short-term. Yet, a confirmation could only come below the 50% Fibonacci of 7,132 of the 6,535 – 7,728 up leg. If such an incident materializes, the market could search for new lows within the 7,080 – 7,000 restrictive zone, where the 61.8% Fibonacci also lies.

 

Alternatively, a rebound above the ascending trendline and the 38.2% Fibonacci of 7,272 would eliminate worries of a down-trending market, shifting the spotlight towards the 7,345 resistance region and the 200-day simple moving average (SMA) currently standing at 7,368. Slightly higher, the 23.6% Fibonacci of 7,447 should also attract attention in case of a steeper increase, while higher the 7,528 barrier will be watched next.

 

In short, the UK 100 index has broken a supportive trendline and expectations are for additional losses to follow if the 7,132 obstacle fails to defend the market. 

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EURGBP finds wall near 20-SMA; retains neutral mode

EURGBP is consolidating within a trading range over the last two months with an upper boundary at the 0.8590 resistance and the lower boundary at the 0.8275 support level. Currently, the pair is capped by the 20-day simple moving average (SMA) and the blue Kijun-sen line.

The technical indicators are moving with weak momentum within the bearish territory; the MACD has risen marginally above its trigger line, while the RSI is still flattening slightly below 50 area.

 

If the price retreats, it could find support at the two-and-a-half-year low of 0.8275 and any violation of this barrier would shift the neutral mode to strongly negative, flirting with the 0.8115 support, taken from the inside swing peak of April 2016.

 

In the alternative scenario, a run above the 20- and 40-day SMAs and the Ichimoku cloud could drive the price towards the 0.8500 psychological mark. More upside pressure could challenge the 23.6% Fibonacci retracement level of the down leg from 0.9324 to 0.8275 at 0.8520, which coincides with the 100-day SMA. Jumping higher, the upper boundary of the range of 0.8590 could be the next target.

 

In short, EURGBP is bearish in the long-term timeframe and neutral in the short-term.

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EURCAD accelerates to 3-week high; bias cautiously positive

EURCAD is set to close strongly bullish after three consecutive negative weeks, with the pair accelerating from a three-year low of 1.4262 to three-week highs.

Looking at the four-hour chart, the RSI’s position provides some cautious signals as the indicator is already above its 70 overbought mark, though it has yet to show signs of weakness, suggesting that there might be some extra room for improvement in the market.

Moving higher, the bulls should overcome the former 1.4596 resistance level to reach the 78.6% Fibonacci of 1.4620 of the 1.4718-1.4262 downleg. Beyond the latter, the next target could be the 1.4685 barrier.

Should sellers return to the game, the 61.8% Fibonacci  at 1.4544 could act as immediate support before attention shifts back to the 200-period simple moving average (SMA), which has flattened around the 50% Fibonacci of 1.4490. Breaching the latter, the area between the 20-period SMA and the 38.2% Fibonacci of 1.4436 could next take control as it did earlier in the week.

In short, EURCAD could experience more upside pressure, though not for long as the market is already trading in overbought waters. 

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USDCAD at 8-month high; looks bullish above trendlines

USDCAD refused to close below the 200-day simple moving average (SMA) and the supportive trendline last week, staging a remarkable rally instead that led the price above the long-term ascending trendline and to eight-month highs on Friday.

 

The price also pierced the 61.8% Fibonacci of the 1.3663-1.2950 downleg, increasing hopes that more gains could be achieved, with the rising RSI and Stochastics – which have yet to confirm overbought conditions – backing this view as well.

 

Slightly higher, the area around 1.3465 has been frequently tested in previous years and could attract attention in the short-term. Running above it, a more important resistance could appear around the 78.6% Fibonacci of 1.3511, a break of which would bring the 1.3535 barrier taken from the 2016-2017 highs under the spotlight ahead of the 1.3563 support-turned-resistance level.

 

In the negative scenario, a pullback below the descending trendline and the 61.8% Fibonacci of 1.3390 could last until the 1.3345-1.3300 restrictive area, which includes the 50% Fibonacci. Lower, the 20-day SMA and the ascending trendline could reject downside corrections once again. If not, the door would open for the 38.2% Fibonacci of 1.3223 and the 200-day SMA.

 

Looking at the medium-term picture, the outlook has switched from neutral to positive following the rally above the descending trendline and the 1.3381 peak. Yet, with the 50-day SMA holding below the 200-day SMA, the bullish outlook is still looking fragile.

 

Summarizing, USDCAD is currently viewed as bullish both in the short- and medium-term timeframe. 

 

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GBPJPY sharp sell-off continues at 3-month low near 140.00

 
GBPJPY has maintained aggressive selling movement over the last sessions, recording a new three-month low of 140.10 earlier today.

 

The bearish structure in the very short-term is confirmed by the technical indicators, which are hovering in the oversold zone. The MACD is extending its negative tendency well below trigger and zero lines, while the RSI is flattening below the 30 level.

 

Should the pair make another run lower, it’s likely to meet support at the 139.30 barrier, taken from the lows on November 2019. A successful break below this key level would open the way for the 138.90 support, which has been standing since October 2019.

 

In the positive scenario, the pair could improve above the lower Bollinger band level to challenge a stronger resistance area of 140.90 – 141.20. The 142.34 resistance, which lies near the 20-day simple moving average (SMA), remains a big highlight ahead of the 100-day SMA currently at 142.80.

 

Meanwhile, in the short-term picture, the situation seems to be getting more interesting as the 20-day SMA crossed lower to the 40- and the 100-day SMA. Should the lines intersect each other and keep a large distance, the negative outlook may turn even brighter.

In brief, GBPJPY is expected to continue the southward run in the short-term, while in the medium-term, the pair looks to be neutral. A break below the 138.90 support would endorse the negative structure in the bigger picture.

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EURUSD at two-month high; challenges trendline

 

EURUSD bulls forcefully entered the 1.1100 territory on Monday and peaked at a two-month high of 1.1183, but failed to close above the former supportive ascending trendline even though the pair pierced through it.

The price also surpassed the 200-day simple moving average (SMA) but the RSI and Stochastics are currently flagging overbought conditions, suggesting that some downside pressure or some consolidation may emerge in the near-term.

 

A pullback below the 200-day SMA and the 1.1100 level could stall around 1.1065, where the 61.8% Fibonacci of the downleg from 1.1238 to 1.0777 lies. Slightly lower, the area between the 50-day SMA and the 1.1000 mark may next attract attention, while beneath that it would be interesting to see whether the descending trendline, seen around the 38.2% Fibonacci of 1.0953, could also stop the sell-off.

 

On the upside, the price needs to close above the ascending trendline and particularly above the 1.1180 barrier to reach the December peak of 1.1238. If such an action takes place, traders could search for nearby resistance within the 1.1280-1.1300 zone and then around 1.1345.

 

Meanwhile in the medium-term timeframe, the outlook switched from negative to neutral following the rally above 1.0888. The next upgrade could come above 1.1238.

 

Summarizing, EURUSD could take a breather from rising in the short-term unless it manages to close above 1.1180. In the medium-term picture, the pair is trading neutral and only a climb above 1.1238 would shift the outlook to positive. 

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GBPUSD hovers above 4-month low with weak momentum

 

GBPUSD has been trading lower over the last three months with weak momentum, reaching a new four-month low of 1.2725. The risk is still to the downside as the pair remains beneath the Ichimoku cloud and the 20- and 40-day simple moving averages (SMAs). The RSI indicator is flattening below the 50 level, while the MACD oscillator is holding below its trigger and zero lines.

 

In the wake of more negative pressures, the market could meet support at the 50.0% Fibonacci retracement level of the up leg from 1.1957 to 1.3515 near 1.2735 ahead of the recent trough of 1.2725. A successful close below this level could see a retest of the inside swing high of 1.2580 from September 2019, before the 61.8% Fibo of 1.2550.

On the flip side, a move to the upside could see immediate resistance at the 1.2820 and 1.2870 levels, but should the market increase positive momentum above this area, the 38.2% Fibonacci of 1.2920, which coincides with the 20-day SMA, could be the next level in focus. Even higher, the 40-day SMA currently at 1.2985 could attract attention since any strong violation at this point could increase chances for further gains probably towards the 1.3070 region, taken from the peak on February 13.

 

In the medium-term window, the neutral-to-bearish outlook is still intact as long as the price keeps fluctuating between 1.2725 and 1.3285.

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NZDUSD lies near 23.6% Fibonacci; corrects higher in near term

 

NZDUSD has gained ground this week, advancing above the ten-and-half-year low of 0.6190 and the short-term moving averages, with the technical indicators feeding prospects for a possible positive trading. The RSI holds well above 50, while the MACD continues to strengthen in bullish territory and above its red trigger line.  Also, in the Ichimoku indicators, the red Tenkan-sen keeps rising above the blue Kijun-sen. Yet, the pair is facing strong resistance near its previous peak of 0.6325 and the two-month descending trend line.

A failure to overcome the 23.6% Fibonacci level of the down leg 0.6754 – 0.6190 at 0.6325 could send the price down to the 40- and the 20-day simple moving averages (SMAs) at 0.6280 and 0.6274 respectively. Lower, support could be next found around 0.6235, while a decisive close below it could stage steeper sell-off towards the multi-year low of 0.6190.

 

Alternatively, if the price successfully surpasses the significant 0.6325 resistance and the falling trend line, this could open the door for the 0.6358 barrier, taken from the peaks on February 24. Above that, the neutral to bullish move would increase until the 38.2% Fibo of 0.6405 and the 200-day SMA at 0.6428.

 

In the medium-term picture, NZDUSD has been in a short-term bullish correction and would probably find strong resistance at the immediate level of 0.6325. Should the market continue the upward move, the outlook may turn brighter. A run above the 200-day SMA may change the outlook from negative to slightly positive.  A pull back on the downtrend line would continue the longer-term bearish structure.

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XM
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 XM
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EURGBP gives up rally near 200-day SMA

 

EURGBP bulls hit a wall near the 200-day simple moving average (SMA) which perfectly curbed last week’s aggressive rally, with the price edging down to the 0.8600 territory on Wednesday.

The price is currently ready to enter the 0.8647-0.8560 restrictive region formed by the 50% and 38% Fibonacci retracement levels of the 0.9018-0.8275 downleg, where a consolidation phase could take place given the downside reversal in the RSI and Stochastics from the overbought levels.

 

An extension below the bottom of this range could send the pair near its 20- and 50-day SMAs currently placed around the 0.8470 support region and the 23.6% Fibonacci.  Lower, the 0.8392 barrier may attempt to deter any downfalls towards the 0.8300 base.

 

In case the 50% Fibonacci of 0.8647 pushes the price to the upside, the 200-day SMA which is flattening around the 61.8% Fibonacci of 0.8734 could come back into view. A decisive close above that obstacle could trigger a sharper increase towards 0.8850, while higher, the next stop could be near 0.8930.

Meanwhile in the medium-term picture, the outlook had turned slightly positive after the close above 0.8647, but the price is now preparing to resume its neutral profile below that threshold.

Summarizing, EURGBP is expected to face some pressure in the short-term, though a steeper downfall may only come below 0.8560. In the medium-term, a decisive close below 0.8647 would shift the picture from slightly positive to neutral.

 

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