EUR/USD – breakout or fake out?
The European currency increased sharply versus the USD in the yesterday’s US session as there are some rumors that the Federal Reserve will delay another hike. Price maintains a bullish perspective on the short term, has touched new highs, but remains to see what will happen in the upcoming period because has reached a major static resistance. Only a valid breakout above this level will confirm a further increase.
The greenback was demolished by the USDX’s drop, the index is trading much below the 96.00 psychological level, but stay above the 95.45 previous low. An accumulation will signal and oversold and that we may have a reversal on the short term.
Price climbed above the median line (ML) of the ascending pitchfork and most important above the 1.1466 major resistance level (May 2015), a valid breakout will attract more buyers, which will drive the rate towards fresh new highs. Right now is premature to say that we’ll have a further increase because we may still have a Rising Wedge pattern if will slip below the median line (ML) again.
You can see that we had another false breakout above the median line (ML) on July 29, that’s why we have to be patient and to wait for a fresh trading signal.
GBP/USD – drops like a rock
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The Cable remains under selling pressure versus the greenback and is expected to reach new lows in the upcoming hours. We may have some volatility on this pair after the United Kingdom will publish the economic data, the Average Earnings Index may increase by 1.8% in May and could beat the 2.1% estimate. Moreover the Unemployment Rate is expected to remain steady at 4.6% in May, while the Claimant Count Change could increase to 10.5K , from 7.3K.
Price is attracted by the 1.2798 static support and ignores the USDX’s drop, could find support at the mentioned obstacle and at the first warning line (wl1) of the ascending pitchfork. I want to remind you that a valid breakdown through the confluence area formed between these two support levels will accelerate the sell-off.
However, a bounce back will send the rate towards the upper median line (UML) of the major descending pitchfork.
By Olimpiu Tuns, Market Analyst at MultiBank Exchange Group
