Technical Update - EURUSD and GBPUSD rejected at key resistance levels. Trend reversal in the cards
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
EURUSD rejected at 1.06. Uptrend set to reverse with down side potential to 1.01
GBPUSD rejected at key level at 1.23. Rising wedge pattern indicates a reversal
EURUSD rejected at 0.382 retracement of the entire down trend since 2021. (See weekly chart) a few cents below 1.06.
There is divergence on daily time period indicating the short-term rebound/uptrend is weakening and could come to an end. AURUS is currently testing the short-term steep rising trendline and if EURUSD drops back below the daily 200 SMA there is strong indication the trend will reverse. Bear trend will be confirmed by a break below 1.0290. If that scenario plays out there is potential down to support at around 1.01.
If EURUSD breaks above 1.06 the uptrend is likely to extend to around 1.08
GBPUSD has been forming a rising wedge like pattern hitting resistance at around 1.23. GBPUSD has not managed to close above.
Currently testing both the lower rising trendline and the 200 daily SMA GBPUSD could break lower. If GBPUSD breaks below the trendline followed by a break below 1.19 the uptrend has reversed and GBPUSD could drop to the 0.382 retracement at 1.1566. 100 and 55 SMA’s will also provide some support. A close above 1.23 however, could lead to further upside with potential to 1.2660-1.2745.
However, there is no divergence on RSI indicating GBPUSD could move higher but a close above 1.23 is needed.
The 1.23 is strong resistance. It is also the 0.50 retracement of the entire down trend since 2021. Weekly RSI is currently being rejected at the 60 threshold.
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