Technical Update - Directions and key levels for EURUSD double bottom, GBPUSD reversal pattern, EURGBP likely resuming downtrend Technical Update - Directions and key levels for EURUSD double bottom, GBPUSD reversal pattern, EURGBP likely resuming downtrend Technical Update - Directions and key levels for EURUSD double bottom, GBPUSD reversal pattern, EURGBP likely resuming downtrend

Technical Update - Directions and key levels for EURUSD double bottom, GBPUSD reversal pattern, EURGBP likely resuming downtrend

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

  • EURUSD strong support at 1.0665. Forming double bottom pattern
  • GBPUSD bottom and reversal pattern indicating rebound
  • EURGBP could test key strong support at 0.84 once again. Breaking it this time perhaps?

EURUSD has twice bounced from key strong support at 1.0665, forming a very short-term double bottom formation. For a confirmation of a reversal, a daily close above 1.0765 is required. If that occurs, there is upside potential to around 1.0815, which is around the 0.618 retracement of the June bearish move (red Fibonacci levels) and the 1.618 projection of the double bottom (blue Fibonacci levels).

However, there is strong overhead resistance in the form of a declining 55 daily moving average currently around 1.0765, and above that, there are both the 100 and 200 moving averages around 1.08.

A daily close above 1.0815 could lead to a continued bullish push towards 1.0850 and 1.09.

If EURUSD instead breaks below 1.0665—ideally closing below for confirmation—it will most likely fuel a sell-off down to the next support at around 1.06. If that scenario plays out, it could quite possibly trade lower towards the Q3 2023 low around 1.0448. See weekly chart.

RSI is showing negative sentiment, indicating the breakout is likely to be to the downside. A daily RSI close above 60 is required for a confirmation of a bullish trend.

Source all charts and data: Saxo Group

GBPUSD formed a bullish engulfing candle yesterday, indicating a bottom and reversal. Bouncing from the 55 daily moving average, GBPUSD could push to test the resistance at around 1.2740.

GBPUSD is still above the cloud, and RSI, moving in a falling channel-like pattern, is still showing positive sentiment. An RSI close above its upper falling trendline would be a strong indication of GBPUSD resuming the uptrend. GBPUSD closing above 1.2740 and RSI closing above 60 will confirm the bullish scenario.

A break below 1.2620 is likely to push GBPUSD down to support at around 1.2562, where the 200 daily moving average will add to the support strength.
A daily close below could see GBPUSD dropping to around 1.25–1.2450

EURGBP has bounced from strong support around 0.84 to close to the 0.382 retracement at 0.8482 but now seems to be resuming the downtrend.

A close below the 0.618 retracement (red Fibonacci levels) and support at 0.8428 is likely to push EURGBP below the key strong support at around 0.84 and down to around 0.8345.

A daily close above 0.8485 is likely to fuel a short rally towards the 0.618 retracement at 0.8535 (blue Fibonacci levels).

RSI is showing negative sentiment, indicating EURGBP is likely to push lower

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