Technical Update - It could be correction time in EURUSD, GBPUSD, EURGBP and the Dollar Index Technical Update - It could be correction time in EURUSD, GBPUSD, EURGBP and the Dollar Index Technical Update - It could be correction time in EURUSD, GBPUSD, EURGBP and the Dollar Index

Technical Update - It could be correction time in EURUSD, GBPUSD, EURGBP and the Dollar Index

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Downtrends in EURUSD and GBPUSD are a bit stretched. Corrections from key supports could be seen before downtrends are likely to resume
EURGBP forming Descending triangle pattern. Break out direction is 50/50
Dollar Index still has room up to 105.80 but a short-term correction seems likely


EURUSD is trading in a falling channel pattern and seems to be finding support around the middle of the Consolidation area at 1.0685.

RSI divergence is indicating downtrend exhaustion which could result in a correction. A correction that could take EURUSD 0.382 retracement at 1.0911. However, the 100 and 55 Moving Averages are declining just around that area adding to the overhead resistance limiting the rebound potential.

EURUSD rebound could run out of steam at the 200 Moving Average and the upper falling trendline.
A break below 1.0685 is likely to test the Consolidation area low at 1.0635 and a close below paves the road towards 1.05.   

If EURUSD is closing a week below 1.0635 the medium-term uptrend has been reversed – see weekly chart.
However, there is strong support around the 1.0635 level, the weekly 55 Moving Average is coming up adding to that support.
If closing below 1.0635 there is room down to around 1.05
Source all charts and data: Saxo Group

GBPUSD has found support at the 200 Moving Average and could bounce from here.  A test of the upper falling trend line could be seen. If GBPUSD is breaking above the trendline a bullish move to the 0.382 retracement at 1.27 is quite likely

However, the upside potential seems fairly limited with the 55 Moving Average and 100 Moving Average coming down adding some resistance
RSI is in negative sentiment without divergence indicating lower GBPUSD levels are likely thus a correction I very likely to be short-lived and limited.

If GBPUSD breaks below 1.2430 the sell-off is likely to push the pair down to support at around 1.23
EURGBP is testing the upper falling trendline in what could be a Descending triangle like pattern. Break out is needed for direction and break out direction is 50/50 up/down.

If breaking out bullish there is upside potential to around 0.8750-0.88 but the price should at least move to the highest peak in the triangle i.e., at around 0.87.
Some resistance at around 0.8668

If breaking bearish out of the triangle there is downside potential to 0.8350
Dollar Index uptrend is weakening indicated by RSI divergence, RSI values have been declining as Dollar Index has moved higher.

A correction could be seen possibly down to the 0.382 retracement and strong support at 102.87 before uptrend is likely to resume.
If the Dollar Index is taking out last week’s peak at 105.13 a spike up to strong resistance at around 105.80 is a quite likely outcome
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